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Sporticus

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  1. Ripple will live or die by the safe harbor provision that is being litigated in the US Dist Ct.ND CA case and the fact of public distribution is unclear. There is really no difference between Telegram and Ripple, except Ripple got a head start.
  2. The dude was rude to me and payback time. He claims to understand US securities laws and he criticizes those who actually do. He is misleading and fraudulent. The fact is completely uninformed idiots hold forth in this chat. Read the substance of what the Court opined and a registered broke dealer wrote, which I quoted. That is the message. I am simply the messenger. Crypto as we know it, is a PONZI scheme and the 3000 crap coins are violations under United States laws. They are all financial crimes used to sell unlawful securities and violate banking secrecy and money laundering laws.
  3. BEND OVER ALL XRP HODLERS! Below is the Order for those who know how to read law, (that excludes the semi-literate and one brain cell capacity Tiny Account). We will see how Ripple overcomes the next layer of issues pertaining to the securities characterization of XRP. The court's ruling is in red. . Plaintiff Adequately Alleged the Federal Securities Claim Against Defendants Title 15 U.S.C § 77l(a)(1) provides the following in relevant part: “Any person who— (1) offers or sells a security in violation of section 77e of this title, or . . . shall be liable, subject to subsection (b), to the person purchasing such security from him . . .” 15 U.S.C § 77l(a)(1). Title 15 U.S.C § 77e(a)(1) provides the following: “Unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly— . . . (1) to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell Ripple lost on the main issues: that XRP is not a security and the three year statute of repose issue as to when their security was first offered to the general public, which was Ripple's strongest line of defense. https://www.courtlistener.com/recap/gov.uscourts.cand.334410/gov.uscourts.cand.334410.85.0.pdf B. Analysis 1. Plaintiff’s Claims under the Federal Securities Laws Are Not Barred by the Statute of Repose Here, whether Title 15 U.S.C § 77(m)’s three-year statute of repose bars plaintiff’s federal securities law claims depends upon two distinct issues: (1) the controlling rule for measuring when the statute of repose commences for purpose of Title 15 U.S.C § 77l(a)(1); and (2) when the alleged (or judicially noticeable) sales of XRP first qualified as a “bona fide” public offering within the meaning of Title 15 U.S.C. § 77l(a)(1). b. The First Offered Rule Does Not Bars Plaintiff’s Federal Securities Claims Having decided the controlling rule for determining when the statute of repose commences, the next issue is its application. Based on the allegations and judicially noticeable facts, the court concludes that defendants did not make their first bona fide public offering of XRP before August 5, 2016 (three years prior to plaintiff’s filing of his federal securities claims in this action on August 5, 2019) It really does not mean much though because Ripple simply follows slavishly Bit Coin and has no genuine use case or value impacting its crypto market share, save speculation. This article below is written by a professional who understands the securities problems of cryptos like Ripple. https://www.coindesk.com/securities-law-helped-build-modern-capitalism-crypto-should-embrace-it THE FOLLOWING IS WRITTEN BY: Bruce Fenton is CEO of Chainstone Labs, which owns Atlantic Financial, the Satoshi Roundtable and Watchdog Capital, an SEC registered broker-dealer. In 1602, the Dutch East India Company launched a new structure of ownership called the joint stock company. For the first time, investors could own and trade small pieces of businesses called shares. This invention changed the world. Securities are one of the most crucial components to the operation of our global economy. Many types of securities have become heavily regulated over the last century. This isn’t a discussion in favor of the regulations (many are overly burdensome and outdated) but it does point to the importance of securities as a structure. The logistics of operating and fundraising for public companies is hard work. Fundraising is a process with lots of friction, compliance requirements and paperwork. The ongoing operation of a public company can have complex management issues. For large companies, this is typically handled by trusted third parties like DTCC, which provides clearing and depository services. If we can make this easier, it could have a massive positive impact. Distributed ledgers allow us to replace trusted third parties and have a blockchain manage the ledger. This makes securities move more easily and quickly. The invention of distributed ledgers, bitcoin (BTC) and blockchains is not the same as the invention of the joint stock company and Dutch East India Co. It’s not a new economic model; it’s a new technology and tool that improves how ledgers work. The invention is more similar to the printing press, the computer or the internet. It’s a big deal, but it’s not an invention that changes existing laws of economics. Just as bitcoin doesn’t change the properties of money but finds a way to improve on money, tokens don’t change the fundamentals of investing; they improve on the existing inventions. Think of it as an evolution from paper stock certificates to something better than paper but where the fundamentals of the underlying legal structure stay the same. Just because we invented a better form of paper doesn’t mean we should scrap the most productive and proven legal instrument in history for an unproven model of widgets with no terms. Instead of reinventing the bicycle, let’s improve on a proven model and update the Dutch East India Co. model for a new century. In 2016, when I saw some of the first of the new wave of initial coin offerings (ICO), I had two simultaneous reactions: 1. Wow, this is amazing. 2. Wow, this is in violation of securities regulations. I’ve been registered in the securities business in some form for 28 years now. Since I was 19 and done billions of dollars in transactions. So I knew it was possible to comply with the regulations. Rather than trying to avoid being a security, I figured the right choice for most companies would be to simply embrace being a security and focus on complying with regulations. This is a key difference from how many looked at it in the early days and how some still do. This isn’t because I think the regulations are great, but because I know they are unavoidable. The first time I heard of the Securities and Exchange Commission was at about age seven when my stockbroker Mom came home and told us that the SEC, Federal Bureau of Investigation and police had arrested someone in her firm who broke the rules. I thought this was fascinating. Only 12 years later I had my first job in a brokerage where the seriousness of federal laws was emphasized in our training. These rules have been around for 87 years and are not going anywhere. THIS IS THE EQUIVALENT OF A MARIJUANA ACTIVIST OPENING AN UNLICENSED DISPENSARY IN TIMES SQUARE. Forget trying to ignore the laws or hoping they go away or thinking “this tech makes it different.” Advocacy also matters little relative to old laws affecting trillions of dollars. Some in crypto think they can just build to violate these laws; it doesn’t work that way. This is the equivalent of a marijuana activist opening an unlicensed dispensary in Times Square. Some may support the ideology, but it would be an ineffective activist action. In the first ICO wave, many focused on trying to prove “utility” so they wouldn’t be classified as a security. Today we still see similar efforts from some exchanges. For example, Coinbase’s Crypto Ratings Council makes a case for why certain instruments are not securities, instead of doing the harder work to become licensed to deal in legal securities. Many DeFi projects, and efforts such as Hester Peirce’s "Safe Harbor" proposal, continue down the same road. The goal is to avoid being a security. I think this is a mistake. The Securities Act of 1933 defines a security very broadly: any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
  4. The problem I see with a Ripple IPO involves the necessity of explaining adequately to any stock subscriber contingent liabilities in relation to pending securities lawsuits. The class action suit filed against Ripple for securities violations in relation to the XRP Perpetual Coin Offering (PCO) is outside the purview of the SEC. That class action suit is a civil matter where the SEC is not a party and is filed by a representative of the class by a competent and reputable law firm in the US District Court for the Northern District of California. The SEC can be influenced by ICO promoters and the SEC has acted in a capricious fashion if you compare EOS and Telegram ICO's legal outcomes. In this Ripple class action there is no SEC for Ripple lawyers to schmooze or influence, but the company will have to defend on the merits. These are contingent litigation risks factors are difficult for quantification and qualification, and any of Ripple's IPO disclosures need to be very granular and detailed to avoid an additional law suit for failure to ameliorate information asymmetry requirements in their IPO.
  5. Here is a recent survey of central banks positioning on the use of digital currencies. The survey answers at a very granular and statistical level some of the issues implicated by the MAS paper. https://www.bis.org/publ/bppdf/bispap107.htm Impending arrival - a sequel to the survey on central bank digital currency BIS Papers | No 107 | 23 January 2020 by Codruta Boar, Henry Holden and Amber Wadsworth PDF full text (205kb) | 19 pages Research and experimentation on central bank digital currencies continue to fuel discussion and debate. This BIS paper updates an earlier survey that asked central banks how their plans in this area are developing. The latest responses show emerging market economies reporting stronger motivations and a higher likelihood that they will issue digital currencies, with central banks representing a fifth of the world's population reportedly likely to issue very soon. JEL classificatio
  6. Matters in the law are not always cut and dry. I can see an interesting set of scenarios which flow from the ICO similarities of EOS and Ripple. These are simply my personal views and are not intended as legal advice. The administrative fine EOS paid was to the SEC, which is the agency of the US Gov't having administrative jurisdiction over securities offers (ICO's) like EOS issued. The SEC likewise can bring a party who breaches the securities law into court on either civil or criminal charges, courts are a separate branch of US Gov't apart from executive agencies like the SEC. . EOS avoided all the court action by entering into a consent agreement with the SEC. But no court proceeding determined anything pertaining to EOS, and neither were there any private individuals involved. EOS is still vulnerable to a securities cause of action from anyone damaged by EOS ICO and is amenable to suit on either state or federal causes of action. The SEC administrative action against EOS does not operate to preclude the issue in Court as to any third party private cause of action, nor does it collaterally estop an assertion of a claim based upon a private right being infringed under the securities laws. Both the US Gov't and private individuals can separately avail themselves of the protection provided by the securities laws. Private individuals can likewise assert state claims for violation of state securities laws, separate and apart form any federally based claims. The SEC has not brought any action against Ripple administratively or judicially. The action brought against Ripple is by private individuals seeking a class action damages award for breach of state and federal security laws. Likewise, if there are some individuals who were harmed by EOS securities offering, then they could sue EOS in court just as has been done against Ripple. The fact that EOS has a consent agreement with the SEC could certainly be used against EOS in any subsequent individual party litigation initiated in civil court. The SEC along with the US Dep't of Justice could likewise initiate a criminal proceeding against Ripple separate from the private cause of action. The interesting aspect of all this is that if Ripple were to destroy all remaining XRP and stop issuing XRP to fund its platform and capitalize its operation from the sale of its speculative asset XRP, it would likely be immune from future actions based upon breaching securities laws going forward. But that would not immunize Ripple from any liability for damages incurred up to the date of the XRP destruction. Ripple has enough liquidity in XRP to perform its announced use case. It opens itself to securities liability by its continued sale of XRP. It would surely help the XRP hodler's value and it would be best if Ripple destroyed all remaining XRP. But they are likely too greedy or stupid to do that. I think ultimately Ripple could accrue some hefty liability, which could be erased by reorganization in bankruptcy if the corporation's solvency were threatened. Of course, this would all take a while to play out.
  7. My view, you are basically correct. That is the effect of a securities class action which involves everyone who has sustained a similar loss. The amount of loss to bagholders and those who sold low could exceed the value of Ripple assets. The courts' class action jurisdiction could even extend to exchanges. Of course, Ripple could bankrupt and we would be able to see what would happen to the value of XRP. This would test Garlinghouse's oft repeated hypothetical that, "Ripple could go bankrupt and XRP would continue." The point is, Ripple created these risks by placing XRP into the market and hyping it andperforming all kinds of acts to increae XRPs value. It is too late, Ripple did not fully disclosed the possible risks which are required in a registered securities offering. The fact that the XRP investing public is having to guess about the risks is a problem in itself. The securities laws are there mostly to require issuers to disclose all material risks relating to purchasing their speculative instruments. The term which the SEC uses is information asymmetry.
  8. You have aptly named yourself, Tiny, and your opinions are baseless and foolish. I will not respond to you in future. It is like trying to put lip stick on a pig and then teaching it to sing.
  9. Oil is not a securities instrument and is a commodity. It has a definite functional use case and is consumable. XRP has no intrinsic value and has a minuscule functional use case in relation to the volume exchanged. Howey test is an investment of money in a common enterprise with an expectation of profit derived from the efforts of others. You are obviously not much at rocket surgery, logic or legal reasoning, but this should not be hard for even you to understand : "Tiny Account made an investment of tiny money in XRP with an expectation of a tiny profit derived from the efforts of Ripple."
  10. The judge will most likely hear oral argument if she cares to, otherwise she will take the matter under advisement and rule later. So it will be a while until we know the ruling. This judge is a former public defender and a President Clinton appointee. That means she is a liberal. Most federal judges are former prosecutors and tend to be corporatists. This judge is not likely to favor establishment or big business. The law might seem ancient, but that is what precedent is and precedent or statutes are seldom disturbed. The tech does not really alter the securities nature of the offering. Ripple has a way out in the future. Destroy all the rest of the XRP. At least they quit dumping. Even if they do that, they will still be on the hook for any past securities violations which caused anyone damage. Hinman's "Howey Meets Gary speech which I provided excerpts in its entirety explains how a token can start out as a security token and segue into being considered a .utility token. My view is that Ripple is not there yet, and -WILL NOT BE ABLE TO SHED PAST LIABILITY IN THE COURTS- anyone who bought in the past and sustained a loss has a cause of action. Courts could give a damned about the potential technological benefits. There is simply no defense provided by "this is great tech." If anything, novel tech is a reason for a court to act suspiciously.
  11. The really disturbing issue is that Ripple has been using XRP to finance its operations just like what is done with a security, but the company and its officers persist in trying to misrepresent to the investing public that it is not a security, when they would have been better off to remain silent. It seems though that Ripple needed the money from the sale of XRP to expand their operation and admitting that XRP is a security or seeking a determination of the securities status could have cut in to their profits. Ripple has lulled the investor (like many of you XRP Chatters) into assuming the risk to their investment, if XRP is deemed a security. The value of XRP and Ripple are likely to be greatly reduced if Ripple is determined a security. The likelihood that the judge and jury will apply the securities laws and the Howey test to Ripple's token issuance operation is overwhelmingly likely. ( Howey test requires an investment of money in a common enterprise with an expectation of profit derived from the efforts of others.) I have not seen any valid arguments which would allow Ripple to avoid a securities characterization in a court of law based upon the facts of the Ripple and XRP relationship. I assign the tendency of stupid people to persist in mistaken notions and to try to school informed experts to the Dunning Kruger effect. Coined in 1999, by then-Cornell psychologists David Dunning and Justin Kruger, the eponymous Dunning-Kruger Effect is a cognitive bias whereby people who are incompetent at something are unable to recognize their own incompetence. Oftentimes, the people who benefit most from deluding or conning the ignorant are far from stupid, but are unscrupulous and greedy, and that is why securities laws are in place: to protect stupid people from the greedy and unscrupulous con men.
  12. Much of the material which you refer to as argument, if reliably reported, are admissions of an agent and constitute evidence supporting a violation of the US securities laws. What strikes me about Ripple is that they have been heavy on tech and business types like Schwartz and Garlinghouse, but early on they did not have a sense of the legal significance of what they were doing or how they were operating a new business which retained vestiges of a money services business and a securities exchange offering which they were boldly used to finance their platform and enrich themselves. You see it most problematically when FinCEN caught up with Ripple et al and they were required to enter a consent agreement with a fine or face criminal indictment. BSA and AML are big issues in the money remittance business and with legitimate financial institutions everywhere. A really astonishing naivete' seems to inform any objective viewer of Ripple's actions in the securities and money services business realms from the company's inception. Typically, financial institutions have trained legal counsel as compliance officers calling the shots. Proceeding with Schwartz as the combined PR, IR and compliance guy is hilarious and amateurish, it goes with his unique sense of dress and hair-styling. Garlinghouse is somewhat better in his sartorail discretion, but he inherited a hot mess from Jed McCaleb and Chris Larsen. Below are excerpted references to SEC Director William Hinman, which were remarks in a 2018 speech he gave called "When Howey Met Gary (Plastics)". There is a tendency of the lay person to gloss over the significance of such language, but this is the position of the SEC in the summer of 2018 and since then, the noose around the crypto neck is being pulled tighter. To ignore such language is a good way to get a jail address.
  13. The EFT Act does not control the SEC's determination of the security status of XRP. The SEC and the US District Court are not bound by this federal register citation in relation to a securities characterization. Notwithstanding, a distributed ledger technology asset like XRP can be both a virtual currency and a security.
  14. You try "answering a simple question without dissembling." You have not responded to the issues which I have posed.
  15. These are the questions you have been asked to justify, answer and/or prove. The failure to answer on an issue relevant to the truthfulness or falsity of a position is an admission. Neither you or Ripple in their response did not explain why they are not a security by addressing the relevant case law, they have not sought a no action position, and nor have addressed Howey, Turnkey Jet or Pocketful of Quarters.
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