Crypto Analyst Predictions for XRP During the Bull Cycle

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On July 24, 2023, Ben BitBoy Armstrong, a prominent figure in the cryptocurrency world, explained why he is currently so bullish on XRP. Before we take a closer look at Armstrong’s comments, it might be good to provide some background information.

What does Judge Torres say about July 13?

On July 13, 2023, the Hon. Analisa Torres, District Judge in the United States District Court for the Southern District of New York, issued a decision in the SEC lawsuit against Ripple Labs, which was commenced in December 2020.

The United States Securities and Exchange Commission (SEC) had filed a lawsuit against Ripple Labs Inc. and its two senior executives, Bradley Garlinghouse and Christian A. Larsen. The SEC claimed that Ripple and its executives illegally offered and sold securities, which violated Section 5 of the Securities Act of 1933. The SEC further charged Garlinghouse and Larsen with aiding and abetting these violations by Ripple.

Both parties had submitted their motions for summary judgment to the court. After reviewing the case, the court issued a decision, partially granting and partially denying the motions of the SEC and Ripple and its executives.

According to the ruling, the court granted the SEC’s motion for summary judgment regarding institutional sales, but denied it on other issues. On the other hand, the court granted Ripples’ motion for summary judgment regarding programmatic sales, other distributions, and sales made by Larsen and Garlinghouse. However, the court denied Ripples’ petition regarding institutional sales. As for the SEC’s motion for summary judgment on the complicity claim against Larsen and Garlinghouse, it was DENIED.

In particular, regarding the Larsens and Garlinghouses XRP sales, the judge said:

Like the programmatic sales of Ripples, the XRP sales of Larsens and Garlinghouses were programmatic sales on various digital asset exchanges via blind bid/ask transactions. Larsen and Garlinghouse did not know who they were selling XRP to, and the buyers did not know the identity of the seller. Thus, as a matter of law, the record cannot establish Howey’s third prong with respect to these transactions. For essentially the same reasons as those mentioned above. Since the Court determines that the record does not establish Howey’s first prong with respect to the other distributions, the Court does not determine whether Howey’s second or third prongs have been satisfied. Garlinghouse’s offer and sale of XRP on digital asset exchanges did not constitute offers and sales of investment contracts.

Here is what Judge Torres said about the XRP token:

XRP, as a digital token, is not in itself a contract, a transaction[,] or a scheme that embodies the Howey requirements of an investment contract.

But what if the SEC appeals Judge Torres’ decision?

The SEC’s recent stance on its lawsuit against Ripple Labs emerged against the backdrop of another legal battle. This separate case involves Terraform Labs and its founder, Do Kwon, who are accused of engineering a multi-billion dollar crypto asset securities fraud.

In response to Terraform Labs’ motion to dismiss on July 21, 2023, the SEC highlighted several issues it has with Judge Torres’ ruling on XRP. The defendants in that case had referenced Judge Torres’ decision, which could potentially set a precedent.

The SEC disagreed with the defendants’ assertions, stating that a significant portion of the Ripple decision actually supports the SEC’s allegations in this case and rejects the arguments advanced by the defendants. However, the SEC challenged portions of the ruling relating to programmatic and other sales. They argued that the Ripple decision contradicts and introduces unwarranted stipulations to the Howey test and its descendants.

The SEC further stated that it believed certain aspects of the Ripple ruling were ill-decided and advised the court not to abide by it. SEC staff are currently considering various options for further review and plan to recommend that the SEC pursue such review.

This has caused some concern among XRP holders as to what a call could mean for Ripple and XRP.

However, John Deaton, a prominent US attorney who is following the trial closely, offered words of comfort. In a series of tweets on July 22, 2023, Deaton downplayed the threat of a call. He pointed out that even if an appeal were to occur, it would take at least two years before a decision was made by the 2nd Circuit. Until then, Judge Torres’ decision remains the law.

Deaton further argued that even if the 2nd Circuit found Torres wrong regarding his application of the Howey Third Factor, that does not necessarily mean the SEC wins on programmatic sales. Torres could still rule the same way, concluding that the SEC failed the joint venture factor.

What does crypto analyst Ben Amrstrong say about the medium-term outlook for XRP?

In a tweet sent on July 24, 2023, Armstrong responded to Deatons thread of July 22, 2023 saying that no one is afraid because according to him (and according to John Deatons) it has been established in law that the digital asset XRP per se is not a security and that is why crypto exchanges are no longer afraid to list XRP. So, for the duration of the current/next bull cycle, he is confident that XRP will do well as he sees no danger in sight for the next couple of years at least.

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