Key Insights: 

• Bill Morgan’s unique take on Ripple’s XRP sales to ODL customers questions the SEC’s classification of XRP as an investment contract.
• Morgan suggests Ripple did not know about retail programmatic XRP sales, implying a stronger SEC case had it focused solely on these sales.
• Morgan highlights difficulties for the SEC in proving XRP is a security, noting that the Howey Test needs to apply aptly to ODL sales.

Bill Morgan, a renowned figure in cryptocurrency legal circles and an active Twitter personality has recently shared an intriguing perspective about Ripple’s XRP sales to its On-Demand Liquidity (ODL) customers. This issue has yet to garner the attention it deserves, even though the U.S. Securities and Exchange Commission (SEC) cites it in its ongoing lawsuit against Ripple.

Decoding the Nuances of Ripple’s XRP Sales

Morgan took to Twitter to differentiate between Ripple’s programmatic and ODL sales of XRP. This distinction, he stated, bears significant importance concerning the lawsuit. His statements implied that the XRP community might need to reconsider its perspective.

For example, the difference between programmatic sales v. sales to ODL customers is significant. This distinction may lead to inferences the #XRP community would prefer not to consider. /2

— bill morgan (@Belisarius2020) June 29, 2023

According to Morgan’s tweet, the sales of Ripple XRP to ODL customers do not qualify as investment contracts since ODL customers need more investment intent and expect profits. Instead, they hold XRP briefly and utilize it more like a consumable asset.

Significantly, the crypto lawyer argued that Ripple couldn’t identify the retail users in its programmatic sales of XRP, as these sales were primarily facilitated by market makers, often through cryptocurrency exchanges. He suggested that if the SEC had confined its lawsuit to these programmatic sales, it would have been in a more robust position.

Moreover, Ripple’s cautionary pause on the programmatic sales shortly after the SEC’s warning in September 2019 only amplifies concerns around these sales. Morgan believes that Ripple perceived these sales’ potential risks from a securities standpoint and decided to continue with the ODL sales.

The Howey Test Dilemma for SEC

Morgan has consistently drawn attention to XRP sales to ODL customers in recent months. In a recent update to his Twitter followers, he expressed the challenges the SEC might face in establishing XRP as a security. Morgan emphasized the critical obstacle of aligning the well-known Howey Test with ODL sales, as it must appropriately meet the criteria.

Besides its bearing on the ongoing legal tussle, Morgan’s fresh insight has sparked a lively debate in the cryptocurrency community, which continues to monitor the lawsuit closely. Therefore, keeping track of such developments in this space is crucial. Hence, the crypto world eagerly awaits the outcomes of these evolving legal discussions.

Ultimately, Morgan’s perspective on Ripple’s XRP sales introduces fresh angles to the conversation around cryptocurrencies and securities law.