Ripple’s former Chief Technology Officer David Schwartz recently engaged in a heated exchange with ex-SEC attorney Marc Fagel on X, disputing the agency’s portrayal of XRP during its lawsuit against Ripple.
The debate began after Fagel argued that the SEC’s case focused on Ripple’s sales of XRP as securities, not on XRP itself. Schwartz disagreed, claiming the SEC repeatedly labeled XRP a security in its public statements and legal filings.
“The complaint itself frequently refers to $XRP itself as the security. The SEC’s press release frequently refers to $XRP itself as the security,” Schwartz wrote.
Rewriting History?
Schwartz accused Fagel of oversimplifying the SEC’s arguments. He specifically challenged Fagel’s claim that “their only legal argument was that Ripple sold it as a security.”
“But that’s not true,” Schwartz said. “You are ignoring the entire thrust of their argument, their statements around it, and the pushback they got from the court. This is an attempt at completely rewriting history.”
Fagel conceded that the SEC’s messaging lacked nuance and evolved over time. However, he maintained that the case ultimately centered on whether Ripple sold XRP as securities.
A Landmark Ruling
The exchange comes near the three-year anniversary of Judge Analisa Torres’s mixed ruling in July 2023. She decided that Ripple’s programmatic sales of XRP on public exchanges did not constitute securities transactions, while institutional sales did violate federal securities laws.
The court held that XRP itself is not a security. Judge Torres reasoned that retail buyers on secondary markets could not have reasonably expected profits based on Ripple’s efforts, as required under the Howey Test.
Schwartz emphasized that this was a substantial victory for Ripple. “Right, but let’s not forget that’s because the courts soundly rejected the SEC’s arguments (both to the courts and to the public) to the contrary,” he wrote. “That was, correctly, understood to be a substantial victory at the time.”
The debate highlights lingering disagreements over how the SEC framed its case against Ripple, even after the court’s decision.
