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  1. Like
    Rutski reacted to Seoulite in Ripple Memorandum of Law in Opposition to the SEC Motion to Strike Ripple's Lack of Due Process and Fair Notice Affirmative Defense   
    I skim read it during lunch. Some of the more juicy quotes:

    Among other things, Ripple alleges that a wide variety of people of “ordinary intelligence,” ranging from individual purchasers of XRP, to sophisticated exchanges and broker-dealers, to the SEC’s own commissioners and senior officers, did not know that XRP was an “investment contract” and therefore a  “security,” as shown by the statements and conduct of those various actors. This alone is sufficient to plead that the law and the SEC’s guidance at the time of the alleged Section 5 violation did not “give the person of ordinary intelligence a reasonable opportunity to know what is prohibited.”
    XRP is a virtual currency, not a security. Transactions in XRP are recorded on the XRP Ledger, which is decentralized “software code” that originated in 2011-2012, before Ripple was founded. Since the XRP Ledger was created, highly sophisticated individuals and entities worldwide — certainly people of “ordinary intelligence” — have engaged in more than 1.4 billion transactions in XRP.
    By late 2020, more than 200 exchanges listed XRP; several market - makers made daily transactions in XRP; independent third parties created products and applications that relied on XRP and the XRP Ledger; and countless end-users engaged in daily XRP transactions worth billions of dollars. It is a fair inference that many of these users of XRP would have acted differently if they had known that XRP was subject to the panoply of regulations imposed by the federal securities laws

    As the SEC’s complaint admits, as late as 2020, none of the principal market-makers who transacted in XRP was registered as a broker - dealer under the Securities Exchange. Such registration is required before engaging in exchange-trading, or market-making, of any security. It is inconceivable that every one of these well-advised, sophisticated entities knew that XRP was a security but disregarded their own obligations under the federal securities laws. Indeed, the SEC admits that one of the market-makers had previously registered as a broker - dealer — demonstrating that it was familiar with SEC registration requirements — but chose to become unregistered after December 2019, while it continued to transact in XRP. Thus, a sophisticated market-maker, with full access to the SEC’s public guidance and to skilled legal advisers, concluded that XRP was not a security.

    Indeed, until the SEC brought this action, the SEC itself did not consider XRP to be a security. In 2018, the SEC’s Director of Corporate Finance publicly explained, in a speech that the SEC republished on its website, that neither bitcoin nor ether was a security.
    Prior to this lawsuit, regulators and market participants considered XRP to be similarlysituated to bitcoin and ether, as the three market - leading cryptocurrencies.See 3 (quoting UK regulator discussing “widely known cryptoassets such as Bitcoin, Ether, and XRP” as a collective set); id. ¶ 13 (XRP’s prices were highly correlated with those of bitcoin and ether).
    In short, countless third parties — including market-makers and exchanges executing transactions in XRP and other digital assets, agencies of the United States and foreign governments, countless individuals, and by outward appearances even the SEC itself — had come to the judgment that XRP is not a security. Sophisticated entities that were familiar with the SEC’s registration requirements unsuccessfully sought guidance from the SEC directly, which also supports the adequacy of the pleading of Ripple’s affirmative defense that the SEC did not give fair notice of its interpretations.

    Here, Ripple has alleged in its answer that Ripple has never explicitly or implicitly promised profits to any XRP holder; and has no relationship at all, contractual or otherwise, with the vast majority of XRP holders today, nearly all of whom purchased XRP from third parties on the open market. What limited contracts Ripple did enter into with sophisticated institutional counterparties were not investment contracts, but standard purchase and sale agreements with no promise of efforts by Ripple or future profits. Ripple will prove this through evidence gathered in discovery. For the present motion, the Court must accept Ripple’s allegations as true.
    The SEC argues that it “provided guidance in the digital asset space.” But the parties sharply disagree what that guidance was, and how “a person of ordinary intelligence” would have understood it. That dispute cannot be resolved on the pleadings. Moreover, the SEC does not even attempt to argue that it provided any guidance prior to 2017. But it is seeking to hold Defendants liable for offers and sales all the way from 2013 to the present. So even if the SEC were correct — which it is not — that agency statements from 2017 to the present gave fair notice, it follows that there was not fair notice before 2017 when those statements had not yet been made.
    From 2017 onward, the SEC issued reports and brought enforcement actions based on the legal theory that selling digital tokens via initial coin offerings (“ICOs”) to finance the development of new cryptocurrencies constituted securities offerings. But the SEC does not allege that Ripple engaged in any ICO. At the same time the SEC was warning about ICOs, moreover, it was advising that sales of two established cryptocurrencies very similar to XRP — bitcoin and ether — were not securities. For numerous reasons, there is a genuine dispute as to whether a person of ordinary intelligence would have concluded that the SEC’s actions suggested that XRP was — or was not — a security, given the SEC’s focus on ICOs.
    The SEC’s cherry-picking of facts also omits repeated statements by one of its own Commissioners criticizing the agency’s public statements as inadequate and ambiguous with respect to non-ICO contexts.
    Taken as a whole and in context, the SEC’s past statements and actions compellingly support Ripple’s lack of fair notice defense.
    The Court should deny the SEC’s motion to strike in its entirety.
    (that is literally the entire conclusion, lol)
  2. Like
    Rutski reacted to BillyOckham in Judge Netburn Spells It Out In Crayon for SEC   
    Unlike others here,  I think a settlement could provide regulatory clarity and certainty if the parties involved are of a mind to do so.
    I know Ripple seem intent on getting that certainty,  so any settlement would probably include a letter or rule making from the SEC regarding digital assets.  As I understand it (and I could be wrong) if the SEC did issue a letter or rule then that is enough.
    Evidence of that is that even the public comments regarding Bitcoin and Etherium have been enough for at least some institutions in the USA to hold those cryptos.  So a formal rule making or comment letter would be enough if the wording is clear I think.  
    Just my two drops worth.
  3. Like
    Rutski reacted to brianwalden in Judge Netburn Spells It Out In Crayon for SEC   
    It's easy to do, but how easy is it to get away with? Ripple has a lot of connections, they have people who worked at the SEC in the past who can testify that they saw certain communications.
    I'm no lawyer, but I would think if they get caught not handing over documents that the judge ordered them to they will be in contempt of court. My guess is the safer play is to hand everything over after delaying as long as you possibly can and then let your lawyers do what they do best and put the best possible spin on everything.
  4. Like
    Rutski reacted to djdhrubs in Judge Netburn Spells It Out In Crayon for SEC   
    I'm going to ask something incredibly naive, but I can't help thinking it.
    How easy would it be for the SEC to amend or bury documents being requested of them? Or just to produce some of them, and conveniently lose others?
  5. Like
    Rutski reacted to panmores in Judge Netburn Spells It Out In Crayon for SEC   
    If I remember correctly the only other case where this MOU was applied by the SEC was by the same lawyer leading the SEC case against Ripple - the same lawyer that wrongfully insisted in the same hearing that Ripple was told earlier on they'll use the MOU avenue. How much patience does the court have?
  6. Like
    Rutski reacted to Julian_Williams in Judge Netburn Spells It Out In Crayon for SEC   
    Very much looks that way, and the new lawyers are known (I hear) for their skills in making settlements. 
  7. Like
    Rutski reacted to WrathofKahneman in Judge Netburn Spells It Out In Crayon for SEC   
    They did bring in some veteran trial attorneys.  I think these docs help stack the deck and the SEC is a little nervous.
  8. Like
    Rutski reacted to Julian_Williams in Judge Netburn Spells It Out In Crayon for SEC   
    Ripple want financial clarity and to be able to move their project forward.  SEC want a win and to avoid a scandal.  They both have something the other side wants and there is no room for making this worse.  My guess is Ripple will prolong this long enough to get the discovery docs, because that will give them more muscle, SEC probably want to settle now and not let their situation weaken any further. Just my guess.
  9. Like
    Rutski reacted to Julian_Williams in Judge Netburn Spells It Out In Crayon for SEC   
    playing dirty with the opposition is one thing, playing dirty with the judge is suicidal.
  10. Like
    Rutski reacted to RobertHarpool in Judge Netburn Spells It Out In Crayon for SEC   
    @NightJanitor ... I'll take that bet!! ... I'm certain that won't happen ... 
    ...because, if Tenreiro is true to previous behaviors, the SEC will reference Merriam-Webster and define "discussing" as verbal communication ... and they have no documentation of their (verbal) discussions .. 
  11. Thanks
    Rutski reacted to RobertHarpool in Judge Netburn Spells It Out In Crayon for SEC   
    OK ... not really in 'crayon' ... but, why she has to repeat what she clearly stated before is beyond me ... 

  12. Like
    Rutski reacted to ADingoAteMyXRP in Polysign has Awaken   
    The lede is buried a bit in the business wire article, but the big thing we learned is that PolySign has not just built digital asset custody (and world-class encryption and access provisioning to boot), but they have also built what sounds an awful lot like a P2P trade solution.
    Companies (or governments?) using PolySign will be able to trade or sell their digital assets to one another, settling directly via the custody solution’s built-in escrowing capability without having to go through an intermediary, OTC desk or exchange.
    But why would anyone want to do that? Aside from the ease of use angle, it bypasses middlemen and maintains high security standards.
    It also enables an ODL path that is absolutely mind blowing.
    Imagine if companies holding digital assets via Polysign could elect to participate in ODL as liquidity providers, by providing OTC style large block liquidity for high value transactions. This type of ODL path would bypass exchanges entirely, since it would effectively be facilitated by two P2P/OTC trades settled over Polysign.
    The scenario:
    Bank A wants to send $47M in value to Bank B... way too much for a standard ODL transaction at this point in time. But what if a liquidity provider in country A (LP1) has a PolySign account where they hold a large block of XRP. They sell XRP to Bank A, and that XRP is immediately dropped over Polysign escrow to a Liquidity provider in the Philippines (LP2) that also has a Polysign account. LP2 makes the final local payment to Bank B in PHP... and ALL of this happens atomically in about 60 seconds.
    I don’t know if this is the plan, but I have a strong suspicion it is. Because this more or less solves the biggest problem in ODL today, which is low liquidity and slippage. OTC desks are designed specifically to reduce slippage costs... so why not use that same approach with ODL?
    Why not? Because institutional custody solutions were not yet watertight enough to enable that kind of multiparty flow without risk. To dip their toe in that water, it was necessary to build something new, soup to nuts, to allow custody and automated trade in a way no major DA custodian had done before.
    If this is really what they’re doing, it’s game over for SWIFT.
  13. Like
    Rutski reacted to Julian_Williams in Ripple's response to SEC's Letter   
    its a humdinger of a letter
    So Ripple are going after SEC for 
    using their privileged status to go beyond the law when collecting information about Ripple from overseas governments using their privileged status to not comply with the order of the court to provide discovery documents about their own internal memos and logs  using their privileged status to argue that the voices 15,000 investors represented by J Deaton should not be heard using their privileged status to give ETH and BTC (XRP competitors and sponsors/employers of SEC's employees) competitive advantage  SEC think they can simply play dirty, wreck the lives of the very people they are supposed to be protecting, help Chinese based competitors of XRP and act in bad faith.
    I wonder what the judge will say about all this at the hearing tomorrow? 
  14. Like
    Rutski reacted to Wolfaolyth in Ripple's response to SEC's Letter   
    it's even worse for the SEC : 
    Ripple have Mary Jo White (31st chair of the SEC from 2013 to 2017)
  15. Like
    Rutski reacted to PlanK in Ripple's response to SEC's Letter   
    Two of the lawyers on Ripple's side of the case are ex-SEC lawyers.
    It would be embarrassing if the SEC were to deny some communication took place when the opposite side could say "Yes, it did.  I saw it.  It exists!!".
  16. Like
    Rutski reacted to Panopticon in Ripple's response to SEC's Letter   
    I was pretty sure for quite some time that Ripple ALREADY knew a lot of SEC's dirty laundry in communications. And they just need discovery to officially bring them to light. How it plays out makes me more confident on that.
  17. Thanks
    Rutski reacted to Panopticon in Ripple's response to SEC's Letter   
    Looks likes the SEC keeps it dirty and the judge hopefully will not like it...
  18. Thanks
    Rutski got a reaction from panmores in Discovery Dispute Letter Motion (Judge hands Ripple another victory vs. SEC?)   
    It’s almost like they are desperate for anything and also have nothing to go off. From listening on the call it already seems like Judge Torres is annoyed with the SEC lawyers. I can’t wait for her reaction when she hears this.... 
  19. Like
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  21. Like
    Rutski reacted to GrayFox in Discovery Dispute Letter Motion (Judge hands Ripple another victory vs. SEC?)   
    This whole case seems nothing more than a personal vendetta by the SEC. They previously took Larsen to court and spectacularly lost which forced them to change regulations. Sounds like they were gunning for Larsen and they'd do anything to win. Unfortunately those part time lawyers at the SEC are up against the Avengers of lawyers lol
  22. Thanks
  23. Like
    Rutski got a reaction from VanGogh in Discovery Dispute Letter Motion (Judge hands Ripple another victory vs. SEC?)   
    It’s almost like they are desperate for anything and also have nothing to go off. From listening on the call it already seems like Judge Torres is annoyed with the SEC lawyers. I can’t wait for her reaction when she hears this.... 
  24. Thanks
    Rutski reacted to VanGogh in Discovery Dispute Letter Motion (Judge hands Ripple another victory vs. SEC?)   
    https://www.dropbox.com/s/kxzkvu64gnl8cn9/Discovery Dispute Letter Motion with Exhibits 4.16.2021.pdf?dl=0
    "1. The SEC May Not Conduct Discovery Outside The Scope Of The Federal Rules OF Civil Procedure"
    "2. THe SEC Has Further Violated The Federal Rules By Refusing To Give Notice To Defendants And Produce Its Requests and Related Communications With Foreign Regulators."
    (Apparently judge hasn't ruled yet; looks very good for Ripple, however.)
  25. Thanks
    Rutski reacted to panmores in In the Ripple Case, the SEC Is Now on Trial - and Knows It   
    This is well written gold. Too many worthwhile quotes to share, read the whole thing please.
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