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Pablo

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Everything posted by Pablo

  1. That's very kind of you to say that. I'm definitely an outlier in my views so it feels strange to think that anyone else would read my posts. Some have commented that my views have changed recently. Actually, that's not quite right - I started life on this forum unpicking Hodor's blog posts so I'm pretty consistent - skeptical and prepared to dig into sources while others skim over the top. I mean, check that post I linked from 2017 - not too shabby, even if I say so myself. One thing has changed this year - I'm no longer simply an observer and investor. I'm working in the space. OK, onto the questions - and apologies because this might be the last time I post for a few days. I'm pretty busy! I've seen these types of comments appear frequently and not just in the context of this case. The fact is that the SEC did offer detailed assessment of ICOs, crypto sales and DAOs in their DAO report published in 2017. The report wasn't perfect but it was a start. Reading it now, it's hard to say people were not put on notice or weren't warned: Ripple got its own advice in 2013 and the advice was that there was a risk that sales of XRP could be viewed as an unregistered securities offering. The investors in Ripple also got advice and were aware of the risks. That's why they took steps to protect their investments via redemption clauses. Coinbase took advice and viewed XRP as a risk for a good long while until they cracked under investor demand. So everyone knew and mitigated their risk accordingly. Except us. The main question for me is not why is Ripple being prosecuted, but rather why are other projects such as Algorand, Ethereum and the big DeFi projects not being prosecuted. Agreed - that's exactly what Ripple have done. My post was using short-hand to cut to the chase but I'm glad you bring this up. The fair notice defence is a pleading in the alternative because the consequences of successfully pleading that defence leaves Ripple in a bind after the case is over. What Ripple really needs here is a positive declaration that their sales of XRP are not unregistered securities offerings. The fair notice defence doesn't give them that. Fair notice is only a short-term tactical victory because it doesn't resolve the uncertainty around future sales of XRP in the US nor resolve the secondary market questions. Now we're back to the question of leverage and negotiation with the SEC which I've always said is the main game. Without a comprehensive statement from the courts endorsing Ripple's sales of XRP, Ripple needs to go to the negotiating table with the SEC to provide clarity to all market participants. I'm guessing the parties already tried to settle and failed. That has to be because the SEC will not accept Ripple's continued sales of XRP in the US market and intends to take this to the wire. I'm not concerned about secondary markets. I just wish the secondary markets agreed with me. In response to questions from Justice Netburn at the March 19 hearing, Jorge Tenreiro confirmed that the SEC does not view secondary market participants as within the scope of the Securities Act violations being alleged: That was a huge bit of news for me and I'm disappointed it didn't give exchanges the clarity they needed to rethink their delistings. It says a lot about how unsophisticated the exchanges are. Love it. The Aussie in me loves that type of reply - direct and to the point. More please!
  2. Why should you be the only one to have some fun? Seriously though, adjusting the political goggles is relevant in the context of fair notice because it has a significant public policy (read, political) consequences The current administration will be driving public policy outcomes that go directly to the heart of this case and crypto more broadly. NY being pretty much a blue state, you'd expect a large proportion of the justices and potential jurors will reflect that reality too. So if I'm trying to read the bones here, it might be worth me adjusting my reading glasses slightly to the left.
  3. She's been a critic of the SEC approach to crypto prosecutions since her appointment in 2017. The Commissioner first discussed the safe harbor proposal back in 2019 (or maybe even earlier). She published a full draft of the proposal for lawyers to comment in April. There is a mountain of material by her and from her about the gaping holes in the regulatory framework. She's been a strident critic of the SEC approach since her appointment (by Trump no less) in 2017. Why didn't Ripple latch onto her earlier comments about regulatory uncertainty and the safe harbor draft back in April or from 2018, '19 or '20? Because it doesn't fit the defence narrative. Waving the letter around is pure theatrics. Maybe it works, maybe it doesn't. Still, it's not without risk. Let's take a closer look, shall we? I did chuckle at how Ripple's lawyers tip-toed around the safe harbour component of the Commissioner's letter. And they dodged the fact that the Commissioners very favourably name-checked the Crypto Rating Council (https://www.cryptoratingcouncil.com/asset-ratings) which gave XRP the worst rating of all the projects assessed by them. The CRC had effectively determined in August 2019 that XRP is almost certainly a security under US law. It's on their home page. The Commissioner would know this. So Ripple pushing that letter under the judge's nose is a very, very high stakes gamble. What does it say about the Commissioner's real thoughts on Ripple if she name-checks the CRC? Did Ripple's lawyers even check the CRC website? I damn well hope so because that letter is a boomerang so let's see what they prepared if it comes up. I'm betting Tenreiro and Co will completely miss it. The idea the letter lends unique support to a fair notice defence is pretty close to fantasy. On top of everything I've already said, Ripple is claiming the fair notice defence for stuff that happened back in 2013-2020. The letter on the other hand is focused on the situation as it stands today. Here's the other angle that has gone unremarked: Ripple is leaning on the fair notice defence pretty heavily. They only need that type of defence if they feel they may lose the investment contract argument. The defence assumes Ripple, Brad and Chris did breach the Securities Act. It's not their only defence obviously but I've been surprised at how little has been said about a supposed new rule that will re-write securities laws. That would have been fun and certainly mixed things up a bit. The judges will also have a problem untangling the fair notice defence because it undermines Statute of Limitation rules that apply to everyone else. It's effectively saying: Ripple did a bad thing for so long and we said nothing about it and even watched them do it so hey, they're free to go. Yes, that would be novel legal territory I guess, but not one many people will get behind for obvious reasons. Just think about that defence in the context of other corporate malfeasance and you get a sense of the magnitude of the problem and why public policy weighs heavily against courts allowing the use of that type of defence. Finally, if Ripple succeeds on fair notice, the industry is still stuffed because that defence adds nothing to anyone's understanding of the rules and still exposes Ripple to claims for future conduct, not to mention potentially check-mate them on the class action still rolling along on the West Coast. Ripple could even conceivably win on fair notice for past misconduct but be prohibited from future sales. That doesn't help anyone either. Keep in mind that I'm only talking about Ripple, Brad and Chris here. XRP will be fine and maybe better than fine if Ripple has to close down. The community is so strong, I easily see a DAO popping up on Flare that allows holders and MMs to stake their XRP, leveraging the deep liquidity already in the market, pushing XRP into completely different sets of use cases that generate returns for holders of XRP rather than Ripple itself. Imagine that.
  4. Commissioner Peirce's Safe Harbour proposal has been floating around for a very long time - over 2 years and counting - all she has done is reinforce the message with a public letter. She has been making repeated comments about the lack of clarity all the way back to 2017 so she has stayed on brand. Meanwhile, Gary Gensler has been called in by Elizabeth Warren to set out a roadmap for regulation in the space. Great! But don't expect real progress for a while (as in many months). Then we have the FATF guidance going live this year too. Things are slowly turning but not necessarily in crypto's favor. That's the reason why UNI forked out $40m to builld a lobbying group in Washington to push for better regulations. I provided input into the Commissioner's proposal as one of several crypto lawyers who was invited to comment so I have a detailed knowledge of the proposal. It won't apply to Ripple today and even if we could take a time machine back to 2013, Ripple would have failed the safe harbour requirements because it expects projects to be much more open about their business plan, tokenomics, lock-ups and decentralisation strategy. The general view amongst most folks in the space is that regulation by prosecution hasn't worked. But that's a long way from saying that prosecutions aren't warranted. The SEC felt that prosecuting Ripple was so. And with Gary Gensler comfortably settled into his new role, I see no change in that view from the top people at the SEC. I warned at the beginning of the year that Gensler would be unlikely to pull the rug under the case given what it would mean for SEC and the staff working this case. Commissioner Peirce's safe harbour doesn't change that at all. Lots of folks completely mis-read the political environment too. I guess it doesn't help having so few true lefties in this space but if you really understand what the Democrats (and other left-leaning parties) represent, their platform and ambitions, the idea that they would offer Brad and Chris a free pass here is beyond preposterous. Remember, the investigation started in 2019, while Republicans were in control of WH and Senate. So this case now has bipartisan support. It doesn't change my conclusions in the slightest because the open letter changes nothing about the legal status of XRP or have anything to do with the SEC case. It won't affect the judges in the slightest and if the case makes it to trial, the jury will be expected to ignore all public commentary.
  5. Sorry - no longer a mod here. Please report posts if there is a concern and one of the mods will take a look.
  6. That remains to be seen. But the obvious challenge for any country that respects the FATF guidance (which I was surprised to see includes many tax havens) is whether you would permit a DeFi platform register in their country if it couldn't comply with KYC. Lots of these platforms are registered businesses. So they will need to yield. I could easily see a scenario where DEXs need to build wallet whitelists so on/off ramping is only permitted through a KYC/AML exchange or KYC-as-a-Service provider.
  7. I thought the original idea was terrible and the backflip doesn't fix the underlying issue. I don't understand why Hugo is (A) deciding the solutions; (B) determining the voting thresholds; and (C) creating brain-fart tokenomics without consulting the community. Then backflipping without consultation. None of this is good. I get that Flare is his baby but he has plenty of role models to learn from and I don't see Andre Cronje or Hayden Adams or Shachar Bialick at Curve behaving this way. You need to get the community to back you for these big decisions - he's doing the complete opposite and the results speak for themselves. Let's hope it's a "teachable moment" for Hugo - he needs to engage much better with the community (and I don't mean holding AMAs). He'll discover quickly that the community (and not Hugo) is the main driver of value for Flare. The community creates the network effects, not Flare's fancy math. I don't see that in him yet and it's something he'll need to develop fast. That's a very good one to pick up. I wonder if their tax "experts" even turned their mind to that issue. I'm betting not. Here's another one they probably didn't pick up - the liquidity provider (LP) tokens that are minted when you stake liquidity pairs. I'm seeing some other big elephants in the room: 1. FATF guidance that will likely be rolled out in the middle of the extended airdrop process. Luckily, that's a problem that will affect every DeFi platform. The aim of the guidance is to introduce mandatory KYC and AML measures for DEXs and DApps. Should be fun to watch the regulators enforce this. 2. The securities law status of LP tokens - the minting of such tokens isn't just a potential tax event, it creates on-chain rights to trading volume profits and token rewards used to incentivise the pool. Sheesh, I see us re-visiting Howey. Fortunately, this is another industry-wide problem. 3. Possible legal response from Ava Labs regarding Flare's use of the Avalanche Protocol. I always said more litigation was coming. This one will be easier to solve given it's mainly a licensing issue (if even that).
  8. I've mentioned several times that there are lots of parts to this case that could create real headaches for both the SEC and the sector if the parties go to trial and a judgement is issued. The fair notice defence is just one of the elements that I'm watching with interest even though I have to say that the idea that one can claim as a defence the fact that regulators, who mainly operate on threadbare budgets, never got around to prosecuting you seems rather weak and offends my lawyer's commonsense principles. That's why we have limitation periods. If the parties don't manage to settle, Judge Torres would need to thread a needle between the well established principles of limitation periods while protecting the legitimate need for a Fair Notice type of defence. Only the lawyers would enjoy that spectacle. And it will be so convoluted and loaded with caveats no one else could make use of such a judgement. What happens if Ripple is successful in the defence? Do they get immunity for future conduct that would otherwise offend the Securities Act? Can they continue to behave as they did previously even though the courts have told them such sales offend the Securities Act today? Of course not. If they are talking about past misconduct and are relying on the defence only for that past conduct - sure - that makes sense. But that doesn't really solve our problem does it? And by "our problem" I mean Ripple's problem and that hanging over the whole industry to clarify the rules applying to future sales of tokens such as XRP, ETH, DeFi tokens and others. To solve that, both parties still need to go to the negotiating table and bash out a compromise. Just to be clear, if Ripple is successful with their fair notice defence, the securities law issues remain alive for future sales unless the court also rules that Ripple's sales were not, and are not, sales of investment contracts. But if that were true, the defence becomes moot. The Fair Notice defence is actually a backstop - it only makes sense where the court has decided that Ripple's sales of XRP were indeed investment contracts. Maybe this opens a path for a "Ripple Rule" to be created. I still haven't seen a formulation of this rule in any of Ripple's submissions. The idea that you approach courts to make a new rules isn't something done lightly. It takes the legal system years (and many appeals) to develop new rules or principles. With the speed of regulations worldwide, the Ripple Rule could be in danger of becoming a footnote rather than a headline. Maybe the rule will come out of the settlement negotiations. That's a possibility too.
  9. Yes, sorry - I didn't quite address that but then again, I think the path to a full victory for the SEC is not at all clear. This is a game of chess in which Ripple has introduced a novel defence (fair notice) which has little antecedent in this space and is therefore speculative for Ripple and yet equally problematic for the SEC. The SEC is fighting this defence strenuously. They know it has some teeth. As part of their counter-argument, the SEC needed the 2 pieces of legal advice Ripple received in the early days to be admissible as evidence at trial. Ripple argued that such evidence is subject to attorney-client privilege (which it is). This is a minor skirmish on technical legal grounds with major ramifactions. The SEC recently lost their bid to admit that material into evidence: https://www.courtlistener.com/docket/19857399/210/securities-and-exchange-commission-v-ripple-labs-inc/ The other key part of the case relates to Ripple's sales of XRP being viewed as securities offerings. I think it's likely that Ripple/Brad/Chris will lose the argument that their sales of XRP don't count as investment contracts under Howey. Kik and Telegram cases effectively closed those doors on Ripple. So the fair notice defence takes on a great deal of significance. And it's definitely in play. Then we have the wildcard: John Deaton. We simply don't know how the court will deal with John's intervention. That's a lot of uncertainty and irregularity in the trial process and it makes a clear path for victory by either side extremely problematic. On that basis, settlement starts to look really attractive but neither party really has the upper hand. The suggestion that the SEC is "embarrassed" or regretting this litigation is preposterous. They're fulfilling their mandate in accordance with the law. What remains to be seen now is whether they follow through and take on other big fish like Consensys and the big DeFi projects. I promise you they are sweating bullets: https://gov.uniswap.org/t/consensus-check-uni-should-fund-a-political-defense-organization-for-decentralized-finance/12700/77
  10. Extraordinary. Thank you for posting. I've even said on many occassions that we'll know Ripple (and other crypto projects) have hit the big time when they are constantly dealing with dumb or even dangerous litigation. It just never stops when you grow up as a company. This is Ripple in early puberty. Tweaking zits and flirting with danger. Just wait till they IPO! Ha! I suspect she will be following the matter very closely given the public engagement. But this pre-trial positioning isn't a good use of her time as a judge. That's why the courts typically delegate adminstrative and pre-trial matters to junior judges/magistrates/clerks.
  11. There are actually several lawyers in the crypto space who have analysed the case extremely closely explaining how the case will likely play out. Given that these lawyers are either BTC or ETH maxis and are openly critical of Ripple, you can safely assume that they won't pull their punches. Yet I was curious and even a little bit surprised when 2 of the leading figures in this group, Gabriel Shapiro and Stephen Palley had to drop the trolling and actually think through the issues carefully. When they were done discussing, they concluded, perhaps reluctantly, that XRP would likely remain only mildly affected at the conclusion of the matter, even if Ripple and the execs fail in their defence. Here's the thread from earlier this year for the links to the interview by Laura Shin. She's another maxi, yet even she remained level-headed during this interview. Also of interest is that the trolling went on pretty hard last year and in January but I've noticed it has eased off since. Perhaps that's a sign that the case isn't going to plan for the SEC or the maxis and that Ripple is managing to put up a bit of fight. Another important factor to keep in mind that many have forgotten: the process we are watching now is NOT the hearing on the facts. It's only the pre-trial manouevering before a magistrate (Magistrate Netburn is not the trial judge, she simply helps Judge Torres prepare the case for hearing). I'm not saying they're not important steps - they're critical. But there cannot be any judgement until the case goes to hearing or the parties settle beforehand. The way things are going, settlement still looks the likely outcome. And boy, are they going the long way about it. The case has been running for 6 months. No knock-out blows and John's amicus intervention gumming up the works (fun to watch, sure, but efficient?) Why isn't Ripple settling immediately? Where's Gary Gensler to swoop in and save the day? Oh, of course: the boring reality of litigation got in the way. @HenrySeldom - I'm still waiting for your promise of the Gensler magic and quick settlement. Did you mean "quick" as measured by my lawyer's watch? Because, yeah, this case is flying! I made a call early on that Gensler couldn't just walk in and spike the case. Here's what I said back in March to explain why I thought so: Meanwhile: Has the SEC taken their foot off the gas with crypto prosecutions? Nope: https://www.sec.gov/news/press-release/2021-90 Is Gary Gensler the only one driving decision-making and policy at the SEC? Nope: https://www.bloombergquint.com/politics/sec-enforcement-chief-alex-oh-resigns-just-days-after-taking-job If Gensler spikes the Ripple case, he'll be crucified. If the SEC loses, he'll be crucified. If he settles meekly, he'll be crucified. No, the safe bet for Gary Gensler is to let the litigation run its course on its merits and make sure the optics show the SEC fighting like a deranged wildcat all the way. Now, he could use that as cover for a settlement but I suspect the settlement will need to have the appearance of being pretty tough on Ripple and the execs. Why? Because he needs the bloody, mangled heads of Brad Garlinghouse and Chris Larsen on spikes to show to Congress. And if he can't get the whole head, an ear will probably do. Cutting off an ear could sate the bloodlust in Congress for crypto but it isn't life threatening. It's not all bad. Van Gogh did some of his best work after losing one.
  12. I always said that the lawsuit would take months to resolve. Gensler has been settled in for a while now at the SEC and his first response to the litigation? Bringing in reinforcements for the hapless Jorge Tenreiro with not 1 but 2 big guns. The SEC is not playing nice either and have approached regulators in other countries to obtain evidence about Ripple. They are pulling out all the stops to win this case. Why bother with all that horsepower just to settle? Because the SEC is not ready to settle. Keep in mind that where there is a realistic chance of settlement, this would be shared with the court and we would have known about it by now. All I've seen to date is endless interrogatories and procedural skirmishes. To all intents and purposes, it looks like a normal litigation process with the parties moving towards a natural conclusion. We are still in the softening up period where both sides get to see the strength of the other side's case during discovery. Only then will each side know how much leverage they have. Having John Deaton in the mix complicates matters and slows the whole process down (which we can already see happening). There were people claiming that this matter would have settled by February. As for the relative strength of each sides' case, I haven't seen anything that changes my view on the outcome: XRP will likely be fine, Ripple and the execs take a few knocks, maybe pay some fines and disgorgement to the SEC and we all move on. To get to that point, we still have many bridges to cross.
  13. Here's what's more amazing: as they are taxed at higher rates in the coming years (which, as an old lefty, I completely support), the "game" of donating shares/tokens to charity using otherwise unlawful inside information becomes even more lucrative! If the SEC is serious about protecting investors, maybe they could stop mucking about and close that loophole? That applies to crypto founders and insiders too, most of whom have been mining that rich seam of tax minimisation for years. The best ones are those who donate to their own soi-disant "charitable" not-for-profit organisations that they set up themselves and whose main focus actually increases the value of their own holdings.
  14. It might appear so but Jed is actually the biggest beneficiary as he claims a tax credit on the contributions that cost him nothing. He still gets to pocket about 40% of the $100m. Another variation of tax "minimisation" which is being exploited right now in the land of the wealthy CEO is to use insider information to game the donation of shares to charities. As reported recently in this paper from a team at Duke Law School:
  15. Some of their investigations go well beyond securities laws and the Ripple case. Why do this? I think it serves a dual purpose: There's the immediate benefit in this matter. Even if the SEC is setting up for settlement, they need leverage. Putting Ripple's customers and other regulators under pressure in their home country is what leverage looks like. Ripple can call that tactic "improper" but that's lawyer-speak for "effective". Secondly, the US regulatory environment is in gridlock in relation to crypto. The US can't simply lower the bar and remodel their laws to match other nations so the SEC is trying to push other countries to raise their bar a bit more. They can do this in several ways - not only by applying pressure on Ripple's partners and customers worldwide (which in military terms would be equivalent to cutting supply lines) but also by co-opting the SEC's own regulatory partners worldwide. Over time, these regulators will develop what, in international law terms, would be considered "Customary Law". Instead of formal laws and treaties, countries slowly move towards consensus regarding certain standards that ultimately have the same effect as formal treaties. Perhaps the courts can block the SEC from admitting evidence obtained from other jurisdictions. But the US courts are powerless to stop a British or Singaporean or Australian regulator independently investigating Ripple's partners/clients at the request of the SEC, particularly where this occured pre-litigation as happened here. As I warned in my own thread, the SEC may well resort to harsher measures to extract the outcome it is seeking, rather than meekly folding as many have predicted. They have played hard-ball so far even if not very effectively. Now that Gary the Great has been confirmed, we'll find out soon if there is going to be a change of attitude at the SEC.
  16. I'm with @Baka here. I think we can be 100% certain of major corrections in this market for the simple reason that the order books are so unbelievably thin and concentrated across the board compared with mature commodities markets that a small correction can quickly turn into a rout within minutes or hours. There's a lot of coordinated bot activity which can switch off and pull the rug out. I watched entire buy sides of order books evaporate in seconds during the Reddit pump earlier this year. That was February - as in a few weeks ago. So yes, major corrections are part and parcel of this market for now. I accept that the market has improved since 2018 but unless someone can show me evidence that corrections are getting smaller by an order of magnitude to those in 2017 and 2018, I think it's safer to assume deep corrections in the range 20-40% as we proceed through the price levels. Will we see a bear market the likes of which we experienced from 2018 and 2019? Perhaps, but this time going sideways at higher levels. I calculated that in 2017/18, XRP stayed above $1 for about 30 days. I will be watching for that again this year. Not only how high the XRP price can go, but how long it can sustain certain price benchmarks.
  17. I'm no good with TA and in fact I've never used it much. That said, I think it's possible we see $4-5 over the next few weeks. I'm basing that not on technicals but XRP's almost criminally oversold price and the fact we won't hear much news from Ripple HQ while the lawsuit is continuing. It seems counter-intuitive but throwing a blanket over Ripple execs has helped the price a lot. I can't prove this obviously but I also wonder if some of the big market makers such as SBI have stopped or slowed down their XRP sales. They can sell millions with guaranteed 15-30% discounts at spot so taking them out of the market removes a lot of selling pressure. So yes, it's very counter-intuitive and probably wild speculation, but the SEC case might actually be helping us in the short term (unless we get bad news along the way which hasn't happened yet). I'll let the TA maestros chime in on the technicals.
  18. I think that's right - it's unlikely the SEC would agree to a statement that says "XRP is not a security" but by the same measure, it would be unlikely for them to state in the settlement that they won't pursue secondary markets because it has nothing to do with their case against Ripple. The parties would simply set out the terms on which Ripple can and cannot sell XRP in the US market and the extent to which Ripple can and cannot supply XRP to 3rd parties to sell in the US market. Depending on how much leverage Ripple has, I expect they would want the SEC to make some type of declaration regarding XRP because it's important for market confidence and regulatory clarity. We haven't seen the SEC agree to this in other ICO lawsuits but it needs to be asked. In the Kik matter, the SEC won the case but left the question open regarding the Kin token and the outcome was that secondary markets for Kin continued outside the US but Kin hasn't been listed on US exchanges nor has Kik sold any more itself (as far as I can tell). That's not really helpful to the industry.
  19. A couple of years? Are you sure? SBI only recently signed an option to buy XRP from Ripple at 15-30% discounts off spot price and other market makers will have similar arrangements. The SBI deal runs until November this year. That was one welcome discovery coming out of this lawsuit for me as an investor. We've known about aggregate OTC sales and Jed's sales but it was a genuine eye-opener to see the terms of the SBI discounts and the daily volume caps. For me it puts to bed the conspiracy theory peddled by various Twitter personalities that there is some secret cabal of BTC maxis hell-bent on dumping XRP onto the market. Sorry - I should have added @Ripley that I think there's lots of merit in your analysis, particularly with regard to a possible way forward for the parties and industry.
  20. Yes - agreed. And I've given you credit for picking the Tetragon case. You haven't been right on the timings though. Discovery won't start until later in May. Settlement is therefore several months away unless you think a politically expedient settlement will be offered by the SEC. I think it will come down to each party testing the other side's case properly to assess the weaknesses and strengths and build leverage to take into the settlement negotiations. I'm pretty comfortable with the likely landing spot for this case. Win, lose or settle, I think the outcome for XRP and the XRPL itself does not change significantly and I presented the reasons why very early on. However what it means for Ripple and the broader crypto market is an important consideration as well. As a lawyer advising projects on the future state of regulation, the Ripple case is only one small piece of the puzzle. What I've tried to argue is that the actions taken by Ripple and John Deaton and the attempts to embarrass and humiliate the SEC have domino effects beyond this case into other litigation, SEC's ongoing role in this space and the broader question of crypto regulations. To take your parable further, cutting the Gordian Knot was a violent act whose calculus only emerged after further acts of violence were committed. If Gensler is indeed Gary the Great, what other bold steps must he take to make cutting the knot worthwhile? Pursuing one strand coming from this knot is what quick settlement with Ripple means more broadly. It solves our immediate problem but leaves unanswered the larger problem of what to do with crypto. Does it force regulators to double-down and take a tougher stance on crypto or force them to retreat? We can already see some clues. Picking another loose strand here, a Ripple victory or quick settlement doesn't solve Moneygram's class action (even if it appears pretty soft). What should other potential clients in the US do as they watch this unfold? Does settlement give a potential client the certainty they need prior to investment? I'd argue not. They either accept the regulatory uncertainty or they include better forms of redemptions and exit clauses and indemnites to mitigate the risk. Probably a combination of all the above.
  21. @HenrySeldom - you need to explain what a neutral assessment looks like if you think mine is pessimistic. I'm hoping to advance the debate. I think the onus is on you now to supply the following: Propose your alternative hypothesis. Explain what you think is really at stake for SEC if they lose. You may be aware the SEC just filed a new lawsuit against Library Coin. What does that lawsuit tell us about the SEC's intent towards crypto given that Jay Clayton, Hinman and their entire crew are no longer involved? Does it strike you strange that their departures failed to slow down prosecutions against crypto projects? What do you think that tells us about the views of the remaining SEC commissioners? Please tell us what you think the SEC will do if Gensler is confirmed? How long will it be before the SEC provides market guidance regarding fundraising from sales of crypto? Are we talking weeks, months or years? Give us your timeframes for the Ripple matter being resolved. Just pick a quarter this year. On another thread you said this: This is an interesting claim to make. Kik can't sell Kin tokens without jumping through hoops. What would it mean if Ripple were similarly restricted and what do you think this means for Ripple's business plan, investor redemptions etc?
  22. Gary Gensler is on the record saying that in his view, Consensys, the Ethereum Foundation and founders were pre-allocated ETH prior to mainnet launch and because those parties were, and are fundamental to ETH's success, there is a serious question to be asked regarding sales of ETH by those parties. It doesn't mean that ETH itself is a security but does mean that specific sales may have amounted to securities offerings that were subject to the Securities Act. That line of reasoning doesn't help Ripple at all of course but it does have major ramifications for the market. Because if Ripple is found to have breached the Securities Act then Gensler is almost duty-bound to pursue Joe Lubin, Vitalik and Consensys. And the pressure to do so increases if Ripple of John find a "smoking gun" in the SEC files that demonstrate the SEC staff were giving preferential treatment due to their conflicts of interest. There is so much at stake here it's actually mind-bending: I don't see how the SEC can afford to lose this case. If they do lose because they interpreted the act incorrectly, they are facing a tsunami of lawsuits as wronged investors and ICOs pursue the SEC for abusing their authority. If that happens, the SEC may have to respond by categorising a whole range of tokens as securities. The Tetragon decision handed down in Delaware actually establishes some guidance as to how the SEC could formalise this in a manner that would be recognised by the courts as final: Boy, did Clayton hand Gensler a turd sandwich trying to sort this out...
  23. Isn't this call simply to decide on Ripple's request for the SEC to provide documents relating to ETH and BTC? They're still angling for the estoppel/fairness argument and need more evidence to support that. Of course, this material goes to John's case against the SEC and also affects everyone else involved in the litigation extravaganza that has followed the SEC prosecution. I'm guessing they're going to have to fight for it.
  24. These are the very questions being posed by Ripple in its Response. If you want an example of how the courts might view it, the Kik case sets out how the securities laws can apply to crypto projects.
  25. Crowd funding can easily cross over into securities laws depending on how it is marketed and what the expectations of investors is. It even has its own set of rules in the US to provide more flexibility: https://www.sec.gov/smallbusiness/exemptofferings/regcrowdfunding There's no hard and fast rule that crowdfunding = sale of investment contract. But your example of comics is heading in that direction. You can just go back to Howey and check for yourself. Under the Howey test, an investment contract exists when there is: an investment of money in a common enterprise; with a reasonable expectation of profits; to be derived primarily from the entrepreneurial or managerial efforts of others. Publishing comics via crowdfund ticks the first box, maybe ticks the second (the question is whether the promoters encourage hype about first editions, possibility of profits etc) and definitely ticks the third. And just in case you turn a blind eye to it and get sued by investors or the SEC, Kickstarter helpfully ensures that you will feel the full brunt of any litigation because you lose the right to defend yourself and you promise to pay everyone's damages and legal fees too: So, they come to you for advice. Do you advise the project that they are fine and nothing to worry about? Or do you say, "Hey, maybe we should check with the lawyers and the SEC"? The comics/art question is coming to crypto soon with NFTs and I'm expecting the SEC will issue some guidance about it (along with DeFi tokens). That would potentially mean that a person selling an NFT artwork will obviously be OK, but if someone were to split up the NFT into 100,000 fractional holdings that can be traded independently on secondary markets then you've exited the arena of "art collector" and have one foot in the arena of securities law. Look, I'm not saying US securities laws are great - there are some deeply perverse results that make corporate life for US listed entities really tricky. But if they don't like the law, they can change it any time they like. They've had nearly 100 years to do it so today would be good.
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