Ripple CTO Speaks on Firm’s Ability to Use XRP for Ripple Payments After SEC Case Injunction

The Ripple CTO David Schwartz provides clarification on whether the payment firm can still use XRP for its Ripple Payments transactions following the injunction from the SEC lawsuit.

Schwartz’s remarks came as a response to comments from critic and community figure “Scam Detective.” Recall that in addition to imposing a $125 million fine on Ripple for violating securities provisions, Judge Analisa Torres also issued an injunction to bar Ripple from further contravening securities laws through institutional XRP sales.

Can Ripple Still Use XRP for ODL in the US?

This part of the ruling has been the subject of debate due to its lack of clarity, especially to individuals that are not savvy with legal developments. Most recently, Scam Detective came up to suggest that the injunction stops Ripple from using XRP for ODL (On-Demand Liquidity) transactions in the United States.

Recall that ODL is now a part of the newly rebranded Ripple Payments service. Previously, Ripple formed a partnership with American exchange Uphold, looking to leverage the collaboration with the exchange to carry out ODL transactions in the U.S. through a nexus.

Scam Detective argued that since Judge Torres’s injunction puts a stop to institutional sales of XRP, it also means Ripple cannot use XRP for these ODL transactions in the U.S., as ODL transactions are also categorized as institutional sales.

Ripple CTO Remarks

In response, David Schwartz clarified that there is a distinction between “using” XRP and “selling” XRP. While not explicitly stated, the Ripple CTO’s comment implied that there is a difference between the company selling XRP to institutions and using XRP, especially for its payment services.

Do you think sales of XRP and use of XRP are the same thing?

— David “JoelKatz” Schwartz (@JoelKatz) August 8, 2024

Scam Detective further asked Schwartz to confirm if Ripple is actually using XRP to facilitate ODL transactions with a U.S. nexus party. The Ripple CTO clarified again that actually doing something is different from being able to do it. Essentially, while Ripple might not currently be using XRP for ODL transactions with a U.S. nexus, it does not necessarily mean the firm cannot do it.

To prevent further back-and-forth, Schwartz provided a page to the Ripple Payments documentation, pointing to the information at the bottom of the page. The information pertains to the payment flow involved when Ripple uses XRP for cross-border settlements.

After the sender enters the payment information, Ripple validates the transaction, ensuring it is compliant before approving it. Afterward, Ripple’s payout partner ensures the transaction is compliant and then approves it. Following the approval, the system then moves XRP and converts it to the destination currency.

The Ripple CTO’s remarks imply that the firm could still leverage XRP for these payments despite the injunction. As previously reported, industry experts such as CapSign founder Matt Rosendin and attorney Jeremy Hogan also confirmed this in multiple comments.

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