Renowned attorney, Bill Morgan, recently shed light on the role of escrow accounts in demonstrating a common enterprise in a Twitter exchange. His remarks were in response to queries about Ripple, the technology company behind XRP, one of the leading digital currencies.
Addressing the Escrow Concern
Morgan’s comments were sparked by a tweet from a user going by the handle @/mtbulbbright. The user sought the opinions of Morgan and fellow distinguished lawyers John Deaton and Jeremy Hogan on the ongoing discussions about Ripple’s escrow following the LBRY case. The user proposed a potential solution: “Could a potential solution by the court be, we will let you keep the escrow in a cupboard and you only use it to meet demand and you have to prove it.”
In response, Morgan offered a strategic approach taken by Ripple. He wrote: “Ripple came up with a solution in 2020. While there is regulatory uncertainty, only sell XRP to ODL customers. Demand for the use of XRP in ODL seems to be quickly increasing.” He was referring to the company’s On-Demand Liquidity (ODL) service, which utilizes XRP for instant, low-cost international transactions.
SEC and the Escrow Element
Morgan further clarified the position of the Securities and Exchange Commission (SEC) regarding the issue of escrow.
He tweeted: “Yes, the SEC refers to the escrow to show common enterprise in its SJ motion. It is one of several steps it alleges Ripple took as good stewards of XRP to buttress XRP’s price. ‘The escrow account’s purpose was to remind investors of the common enterprise XRP represented.’”
Another Twitter user, @/cryptofunn1, questioned if the SEC had indeed raised the escrow issue, or if it was merely a concern expressed by a few misguided XRP holders who believed the escrow’s existence and Ripple’s alleged dumping of it were preventing XRP from reaching $100.