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Ripple Avoids Securities Question in Motion to Dismiss XRP Lawsuit


ZeeperCreeper

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In plain English - xrp is not a security, but *even if it were * here are the numerous reasons that the complaint should be thrown out as completely frivolous (which are many, with some being rather entertaining).  More than anything, Ripple's response really highlights the halfassed nature of the entire lawsuit and pokes so many holes in plaintiff's claims that they could sink an ocean liner.

It will be interesting to see what the judge has to say on this matter.

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My tuppence worth (I am not a lawyer)... I think that Ripple are saying, the guy  suing basically sued too late. He claims he bought in 2015 and filed over 3 years later. The statute of limitations for this is 3 years. Plus he bought from an exchange! Not from Ripple! Ergo he is suing the wrong party.

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2 hours ago, djdhrubs said:

 

"The footnote also adds that “because XRP is a currency,” it cannot also be a security under law. The filing states that the court itself does not need to determine “whether XRP is a security or currency for purposes of this motion, which assumes Plaintiff’s allegation that XRP is a security.”

The filing also states that “the federal Departments of Treasury and Justice publicly concluded that XRP is a ‘convertible virtual currency,'” in its “factual background” section.

“This is consistent with the CFTC’s position that virtual currency is a commodity,” the filing states." 

I don't believe that Ripple is very concerned about this whole security issue, as the above three agencies and departments have already labelled xrp as being a virtual currency. Even the SEC more or less agreed, when they recently stated that some cryptocurrencies that initially might have once been considered as a security, have now progressed into legitimate use-cases which negates the security classification.  The regulatory clarity that Ripple is seeking, is almost surely focused upon the ability of banks and other financial institutions to actually hold xrp. PolySign, the exchanges, and now MoneyGram, are the work-around solutions for xRapid being able to provide the necessary liquidity. 

Edited by WuWei
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The U.S. Treasury and Dep't of Justice are not the agencies which are responsible for the regulation of   securities within the United States.  XRP can be both a convertible virtual currency and a security. The two are not mutually exclusive, and are referential of separate legal definitions and under different jurisdictions: FinCEN for currency matters and SEC for securities. 

The Securities Exchange Act of 1934 (SEA) was created to govern securities transactions on the secondary market, after issue, ensuring greater financial transparency and accuracy and less fraud or manipulation. The SEA authorized the formation of the Securities and Exchange Commission (SEC), the regulatory arm of the SEA. 

The SEC is the agency with jurisdiction over securities interpretations and enforcement within the United States.

 

The precedent setting case on how the SEC will determine if an offered asset is  a security was determined by the U.S. Supreme Court.The Howey Test refers to a 1946 case which reached the Supreme Court, SEC v. W.J. Howey Co., a lawsuit involving the Howey Company of Florida.

From the perspective of the Howey Test, the operative question, in this case, is whether or not cryptocurrency investors are participating in a speculative enterprise, and if so, if the profits those investors are hoping for are entirely dependent upon the work of a third party. (investopedia)

Relying on the Howie Test, the  most definitive position on cryptocurrencies and securities characterization which the SEC has announced is the Turnkey Jet No Action position.  The procedure to determine whether or not an offering is not violative of the  SEA is to petition the SEC for a no action position. Ripple could easily settle the issue responsibly and lay to rest  the uncertainty they have created by their continuing to sell XRP to fund their operations.   

But they have chosen their  profits over ethics. 

They have chosen to continue opaqueness over  transparency, to manipulate market perceptions, and to make self-serving statements that XRP is not a security, when that fact is not known because a court has not ruled on it definitively,  and any such self-serving assertions of Ripple  are misleading per se. 

This is the rule in the US announced by the lawful authority on point, the SEC,  concerning  what is or is not a crypto-security.

 SEC TURNKEY JET MEMO

Securities Act of 1933
Section 2(a)(1)

April 3, 2019

Response of the Division of Corporation Finance

Re:

TurnKey Jet, Inc.
Incoming letter dated April 2, 2019

Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel that the Tokens are not securities, TKJ offers and sells the Tokens without registration under the Securities Act and the Exchange Act. Capitalized terms have the same meanings as defined in your letter.

In reaching this position, we particularly note that:

TKJ will not use any funds from Token sales to develop the TKJ Platform, Network, or App, and each of these will be fully developed and operational at the time any Tokens are sold;
 

the Tokens will be immediately usable for their intended functionality (purchasing air charter services) at the time they are sold;
 

TKJ will restrict transfers of Tokens to TKJ Wallets only, and not to wallets external to the Platform;
 

TKJ will sell Tokens at a price of one USD per Token throughout the life of the Program, and each Token will represent a TKJ obligation to supply air charter services at a value of one USD per Token;
 

If TKJ offers to repurchase Tokens, it will only do so at a discount to the face value of the Tokens (one USD per Token) that the holder seeks to resell to TKJ, unless a court within the United States orders TKJ to liquidate the Tokens; and
 

The Token is marketed in a manner that emphasizes the functionality of the Token, and not the potential for the increase in the market value of the Token.

This position is based on the representations made to the Division in your letter. Any different facts or conditions might require the Division to reach a different conclusion. Further, this response expresses the Division's position on enforcement action only and does not express any legal conclusion on the question presented.

Sincerely,

Jonathan A. Ingram
Chief Legal Advisor, FinHub
Division of Corporation Finance

 

Ripple denying any securities status is deceitful, because third parties, like those of you who are lay persons, unlettered and foolishly hodlers in this chat space rely on that assertion and buy XRP in the market place. You continue to carp and hold forth with your lack of knowledge and induce other ignorant investors to buy XRP.

The determination of whether Ripple is selling a security is unclear and without absolute clarity any Ripple assertion to the contrary is misleading.

The Ripple/XRP  securities  characterization is for the Courts and the SEC to make,  not Ripple. 

 

If Ripple will claim validly that the corporation has  no relationship with XRP, the company board  should lock it all up and seek the interpretation of the SEC.   That Ripple is continuing  to sell XRP in the market place shows a disregard to the interests of XRP investors, the very ones the SEA was designed to protect  and Ripple shows a flagrant disregard for  the rule of law and has no just

claim to social responsibility.. 

 

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14 hours ago, peanut56 said:

I almost got mad at you O.P. then I realized the rules state you have to use the title of the article. :)

Which is, I think, a stoopid rule.  It’s heaven for the fudders to throw their misleadingly titled articles in here.

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2 hours ago, Sporticus said:

That Ripple is continuing  to sell XRP in the market place shows a disregard to the interests of XRP investors, the very ones the SEA was designed to protect  and Ripple shows a flagrant disregard for  the rule of law and has no just

claim to social responsibility.. 

Woohoo....   someone here has quite a strong legal opinion and apparently wants to save us ignorant fools from ourselves.

 

2 hours ago, Sporticus said:

Ripple denying any securities status is deceitful, because third parties, like those of you who are lay persons, unlettered and foolishly hodlers in this chat space rely on that assertion and buy XRP in the market place. You continue to carp and hold forth with your lack of knowledge and induce other ignorant investors to buy XRP.

As a completely unlettered ignoramous can I take this opportunity to thank you for your righteous indignation on our behalf.  

Now if it’s ok...    I’m going to ignore your opinion completely.  Time will sort out who the fools are...  it could be me.  Or not.

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The U.S. Treasury and Dep't of Justice are not the agencies which are responsible for the regulation of   securities within the United States.  XRP can be both a convertible virtual currency and a security. The two are not mutually exclusive, and are referential of separate legal definitions and under different jurisdictions: FinCEN for currency matters and SEC for securities. 
The Securities Exchange Act of 1934 (SEA) was created to govern securities transactions on the secondary market, after issue, ensuring greater financial transparency and accuracy and less fraud or manipulation. The SEA authorized the formation of the Securities and Exchange Commission (SEC), the regulatory arm of the SEA. 
The SEC is the agency with jurisdiction over securities interpretations and enforcement within the United States.
 
The precedent setting case on how the SEC will determine if an offered asset is  a security was determined by the U.S. Supreme Court.The Howey Test refers to a 1946 case which reached the Supreme Court, SEC v. W.J. Howey Co., a lawsuit involving the Howey Company of Florida.
From the perspective of the Howey Test, the operative question, in this case, is whether or not cryptocurrency investors are participating in a speculative enterprise, and if so, if the profits those investors are hoping for are entirely dependent upon the work of a third party. (investopedia)
Relying on the Howie Test, the  most definitive position on cryptocurrencies and securities characterization which the SEC has announced is the Turnkey Jet No Action position.  The procedure to determine whether or not an offering is not violative of the  SEA is to petition the SEC for a no action position. Ripple could easily settle the issue responsibly and lay to rest  the uncertainty they have created by their continuing to sell XRP to fund their operations.   
But they have chosen their  profits over ethics. 
They have chosen to continue opaqueness over  transparency, to manipulate market perceptions, and to make self-serving statements that XRP is not a security, when that fact is not known because a court has not ruled on it definitively,  and any such self-serving assertions of Ripple  are misleading per se. 
This is the rule in the US announced by the lawful authority on point, the SEC,  concerning  what is or is not a crypto-security.
 SEC TURNKEY JET MEMO
Securities Act of 1933
Section 2(a)(1)

April 3, 2019
Response of the Division of Corporation Finance
Re:
TurnKey Jet, Inc.
Incoming letter dated April 2, 2019

Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel that the Tokens are not securities, TKJ offers and sells the Tokens without registration under the Securities Act and the Exchange Act. Capitalized terms have the same meanings as defined in your letter.
In reaching this position, we particularly note that:
TKJ will not use any funds from Token sales to develop the TKJ Platform, Network, or App, and each of these will be fully developed and operational at the time any Tokens are sold;
 
the Tokens will be immediately usable for their intended functionality (purchasing air charter services) at the time they are sold;
 
TKJ will restrict transfers of Tokens to TKJ Wallets only, and not to wallets external to the Platform;
 
TKJ will sell Tokens at a price of one USD per Token throughout the life of the Program, and each Token will represent a TKJ obligation to supply air charter services at a value of one USD per Token;
 
If TKJ offers to repurchase Tokens, it will only do so at a discount to the face value of the Tokens (one USD per Token) that the holder seeks to resell to TKJ, unless a court within the United States orders TKJ to liquidate the Tokens; and
 
The Token is marketed in a manner that emphasizes the functionality of the Token, and not the potential for the increase in the market value of the Token.
This position is based on the representations made to the Division in your letter. Any different facts or conditions might require the Division to reach a different conclusion. Further, this response expresses the Division's position on enforcement action only and does not express any legal conclusion on the question presented.
Sincerely,
Jonathan A. Ingram
Chief Legal Advisor, FinHub
Division of Corporation Finance

 
Ripple denying any securities status is deceitful, because third parties, like those of you who are lay persons, unlettered and foolishly hodlers in this chat space rely on that assertion and buy XRP in the market place. You continue to carp and hold forth with your lack of knowledge and induce other ignorant investors to buy XRP.
The determination of whether Ripple is selling a security is unclear and without absolute clarity any Ripple assertion to the contrary is misleading.
The Ripple/XRP  securities  characterization is for the Courts and the SEC to make,  not Ripple. 
 
If Ripple will claim validly that the corporation has  no relationship with XRP, the company board  should lock it all up and seek the interpretation of the SEC.   That Ripple is continuing  to sell XRP in the market place shows a disregard to the interests of XRP investors, the very ones the SEA was designed to protect  and Ripple shows a flagrant disregard for  the rule of law and has no just
claim to social responsibility.. 
 
I don't mind your opinion but I do wonder what you're doing on a xrp centric message board. :)
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I guess if a lawsuit brought against you is riddled with stupid easy to deal with flaws, why would you bother even going down the whole securities argument in the first place? Seems a bit stupid to. 

I guess it’s a bit like if you’re a tennis player whose best weapon is an amazing drop shot and you’re up against someone who cannot hit a backhand for love nor money. You’d just keep hitting the ball to their backhand and wouldn’t even need to pull out your main weapon which is harder to execute than just hitting the ball one way.

ok might be a bit of a $hit example but you know what I mean.

It’d be frustrating for everyone who’d paid money to come see you play that dropshot but ultimately you’d win and they’d go home happy enough.

Edited by djdhrubs
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17 hours ago, codiusrex said:

Ripple laid it down for the XRP Community; that buying their asset (the same that they sell for the lion’s share of Ripple’s annual revenue) is not an investment in Ripple.

talking season 3 GIF

03AB43BD-A374-4BD1-BA0B-DF7A79CECD6A.jpeg

"No Common Enterprise"

This is Black on White what Ripple is saying: Ripple is a project that is financed by selling an asset (digital) to the public to finance its operation, but who's future revenue will not go back to those who funded it. Brilliant. 

So, if you expect XRP to go up, it does not depend on the Ripple's partnerships, projects or any variable of succes, rather it relies on the next fool theory.  Good luck to us all. 

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