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MoonLambo

Is Ripple able to claim XRP is not a security due to a loophole?

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6 hours ago, SquaryBone said:

Wouldn't that mean that those 60 billion XRP can't be sold anywhere because Ripple is registered in SF? So US laws apply and they can't just run "illegal" activities as seen by US government in countries where it is legal (the analogy being selling weed to Netherlands where it's legal while in the state you're in it's not legal)?

Even if it were the case it would be the easiest thing in the world to get around. Register a company in Ireland or the Caymans, use transfer pricing to redomicile the assets. Move the operations elsewhere and then the USA loses out completely. But the evidence shows us that Ripple fully intend to play by the rules and it would be foolish of the SEC to antagonise them.

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9 minutes ago, OzAlphaWolf said:

This situation is messier than anyone here even seems to be aware of.

CFTC lawyers have argued that crypto currencies are commodities and a federal judge agreed with them. 

 

However....

https://www.ballardspahr.com/alertspublications/legalalerts/2018-03-08-virtual-currency-is-a-commodity-regulated-by-the-cftc-eastern-district-of-ny-rules.aspx

Wow, didn't know that! Thanks for sharing. 

I'm 100% pro XRP but I'm also a realist. People that say XRP is without a doubt not a security, IMHO, should dig a little deeper. I think laws will have to be written and/or modified, and I bet a lot of things in the coming years will be figured out in court. I think more likely than not there will be a positive outcome and laws will ultimately be forced to adjust in recognition of the new reality that blockchain has created. Today, however, there is NOT a clear answer as to whether or not XRP is a security. If there were then we wouldn't be having this discussion.

I remember once hearing on a podcast that Skype used to break laws that were on the books prior to mass adoption of the internet. Regulators clearly figured that out, didn't they? They didn't just throw away that incredible innovation because it didn't comply with arcane laws. What history shows is that generally when new and valuable technology comes along, people will adapt legislation rather than discard such human advancements. I'm optimistic, but I appreciate the open exchange of thoughts and ideas. It's a way to progress. If I have to bet (and lets be real, I AM betting in a real way by investing in XRP) everything will turn out fine on the securities front. I just don't know exactly what the path will look like, and I'm honest enough to admit that I don't know that for sure.

Thanks to everyone that has been participating in this thread. I learned a number of things today which is what I was hoping for, and I really appreciate the passion and enthusiasm that's on display within XRP community.

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Posted (edited)
5 minutes ago, MoonLambo said:

Today, however, there is NOT a clear answer as to whether or not XRP is a security.

I agree. Personally, it makes little tangible difference to me either way. If it is deemed a security, we can expect Ripple to aggressively appeal that and then we have further lack of clarity for years while that works its way through the courts. In the meantime, crypto will still be taking off in other countries with a hospitable regulatory regime.

Edited by OzAlphaWolf

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Yeah, no surprise there, each agency has already done as it pleases, and tend to see cryptos through their respective agency's lense:  The IRS sees cryptos as virtual property and is already retroactively taxing it as such, CFTC as commodities, and SEC as securities.

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Having worked with regulators, Ripple will likely be exhonorated under ‘safe harbour’ given lack of concrete regulations on XRP.

This token is licensed (Bitlicense) as a digital currency in NY given the uncertainty of this new asset so definitely not a security at the onset.  Ripple, the company however had raised funds thru private placements only subject to accredited/sophisticated investors for their privately held company which is totally legitimate.  Any owner of Ripple stock/shares would be holders of securities.

The monthly selling of XRP held in escrow has been limited in the recent periods given Securities Law of 1933 that stifle broader fund raising and selling with only those tokens sold as a licensed money service business.  This would explain the predominant use of XRP by money exchange remitters.

Based on recent verbage from the US regulator (Clayton), it is clear that they are adopting a ‘sandbox’ approach.  On one hand, they are lacking expert opinion and resources to regulate these new digital assets so their approach is one of self-regulation.  On the other hand, they would like to isolate and ringfence any questionable assets (crytocurrencies, digital tokens/assets, utility tokens) while not impede innovation. 

This is great news as the regulators are letting the new crypto space develop and mature before jumping in to regulate.  It is also clear that all new ICO seeking funding would be treated as a public offering alike the ‘securities’ definition with regulatory oversight.  If it relates to fund raising, this would be subject to regulatory oversight to protect the general public so we will see exodus and selling pressure from these.

In regards to tokens/digital assets/utility like Bitcoin, Ether or XRP, these will be allowed to freely trade on a crypto exchanges as these tokens or the majority owner(s) of these tokens are not seeking to raise funds via sale of tokens hence, cannot be treated as a security.  For XRP, the argument was centered on Ripple’s control of the use of their token given ownership by the conpany or investors and whether their monthly 1b sale of their token was to raise funds or to faciltate MSB under their NY license.

In the worst case, Ripple can always burn their 60b escrowed tokens if this concentration or centralization has been and is still the pressing issue ... only my two cents.

 

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13 hours ago, Centaurus said:

Well, here in the UK it is definitely accepted as currency .?

Dd4RZMKU0AEDlEo.jpg-large.jpeg

Imagine you, paying a 20 pound drive fee in this cab with 45 xrp because you left your banc-card at home, finding out this was a 25,000 drive with XRP at 589...

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Just look at Ripple's (Open Coin's website from 2013.

Links on my article: http://zeroxrp.com/2018/05/in-the-beginning-was-the-supply-and-the-supply-was-with-ripple/

"Ripple was created by OpenCoin Inc. We will be releasing all the source soon. Our intent is for Ripple to exist without a central authority."

And ripple wiki: https://web.archive.org/web/20140121192929/https://ripple.com/wiki/

"Ripple Labs is the creator of Ripple. ()Ripple Labs hopes to make money from #XRP if the world finds Ripple network useful..."
Ripple primer, page 12.

Still think XRP will not be classified as a security?

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24 minutes ago, ZeroXrp said:

Just look at Ripple's (Open Coin's website from 2013.

Links on my article: http://zeroxrp.com/2018/05/in-the-beginning-was-the-supply-and-the-supply-was-with-ripple/

"Ripple was created by OpenCoin Inc. We will be releasing all the source soon. Our intent is for Ripple to exist without a central authority."

 And ripple wiki: https://web.archive.org/web/20140121192929/https://ripple.com/wiki/

"Ripple Labs is the creator of Ripple. ()Ripple Labs hopes to make money from #XRP if the world finds Ripple network useful..."
Ripple primer, page 12.

 Still think XRP will not be classified as a security?

There is a diffrent view on this. As you can see in both articels ripple labs didnt create XRP . They just were given to them. 

So if you just plain view it from a lawers perspective:

Does the inventor of XRP( in this case opencoin)held an ICO? Answer : No

Is Opencoin the same company then ripple labs ( just a rebrand)?  Anwer: No ( i dont think we need to get into detail here ..but the fact that not all xrp were transfered( and even have to be transfered) to ripple labs  is enough https://en.wikipedia.org/wiki/Ripple_(payment_protocol)

 

The process of why 80% of all xrp are gifted to ripple labs is another case. 

Also 2 question arises from this : Are you allowed to make marketing for gifted goods to rise its value? Anwer : yes

                                                            Are you allowed to sell gifted goods? Answer : yes

 

 

 

 

 

 

 

 

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Ok, if xrp is not an asset created by the company why this (from their current website, branding policy):

RIPPLE TRADEMARKS

"The following is a partial list of the trademarks owned by Ripple: Ripple, Ripple, Ripple Trade, XRP, the Ripple logo and the former Ripple Labs logo."

"XRP can be used in brand names of certain businesses only with the express written permission of Ripple."

 

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Posted (edited)

@ZeroXrp hypothetically, I incorporate a private co with 3-4 buddies called OpenWorm but later rebranded as RippleWorm.  We decide to mass produce 100b stainless steel bookmarks with my bookworm logo on it.  These items are arbitrarily sold via flea markets or binned by many people.  After 5 years, online marketplaces evolved to resell used/new items eg, Amazon, TaoBao, eBay.

We now realise that there’s a market for these bookmarks especially in Asia with tiger moms and parents keenly pushing their children for better grades so durable rustless bookworm bookmarks are gaining popularity as the must have school stocker.

Surely, these bookmarks are not a security as there’s no expectation of return or profits.  While we mass manufactured these to take advantage of economies of scale, lower cost and expected surge in steel prices over time, there ‘s no guarantee of profit, ownership or dividends.  Owning more bookmarks will not give you voting rights or power of the private co ...

For Ripple’s XRP, it is quite similar since there’s no profit/return guaranteed.  Only simple case of market demand and supply which can work in either directions leading to price drop or surge.

Similarly, can you deem a woodmill cutting, selling lumber and stockpiling inventory a security by the sheer inventory?  From an accounting perspective, these goods would be treated as raw matrrial, work in progress or finished goods while there’s no guarantee  that the mill can sell at a profit ... think we’re in the same boat ...

 

Edited by bookworm

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10 minutes ago, ZeroXrp said:

Ok, if xrp is not an asset created by the company why this (from their current website, branding policy):

RIPPLE TRADEMARKS

 "The following is a partial list of the trademarks owned by Ripple: Ripple, Ripple, Ripple Trade, XRP, the Ripple logo and the former Ripple Labs logo."

"XRP can be used in brand names of certain businesses only with the express written permission of Ripple."

 

You rise a really good point here!!!! This is where it gets tricky:

To get it you have to look at the trademark Owner History of xrp:https://trademarks.justia.com/859/35/xrp-85935696.html

There you can see->Party Name OpenCoin, Inc.->Party Type 20 - Owner at Publication. So we know now that the open coin was the owner of the trademark.

but we can also see: Party Name -RIPPLE LABS INC.->Party Type31 - 1st New Owner Entered After Registration

 

That means they also gifted/sold the trademark to the new owner. This even underlines that open coind and ripple labs are not just rebrands.

 

AGAIN you could ask why opencoin was so generous or what they did get in return. But as I said -> its another case!

 

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Posted (edited)

From Wikipedia to every article on the web, "Ripple" is mentioned as former "open coin". Or how "Open Coin" renamed to "Ripple Labs".

"Ripple Labs, Inc. was formerly known as OpenCoin, Inc. and changed its name to Ripple Labs, Inc. in September 2013. The company was founded in 2012 and is based in San Francisco, California with offices in New York, London, Sydney, India, Singapore, and Luxembourg."

Bloomberg https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=235707311

Why is that never been corrected anywhere?

Edited by ZeroXrp
Bloomberg link

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I have to say this is very complidated for me to follow but i really like  all your Input here on the Forum!!

I am getting more and more nervous with these discussions though. I would really like to buy more xrp but because of this discussion i don't dare to do it!

Are there more people over here that don t dare to buy more xrp because of this?

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