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On 1/12/2020 at 1:05 PM, 2ndtimearound said:

At this point, it'd probably benefit us more if it was deemed a security....class action lawsuit against Ripple (as the law would be on our side, precedent set).  XRP bagholders would probably end up in a better position than they are now :D

What do you mean? Are you suggesting bag holders would have a claim against Ripple to compensate their losses? Is that what the lawsuit is aiming to achieve?

That would be a very sad day. 😔

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I'm wondering how this issue can be discussed without using latest SEC opinion on the matter as a foundation for discussion: https://www.sec.gov/files/dlt-framework.pdf

 

In this framework you'll find multiple hints that XRP most probably won't be deemed a security, at least in my (although slightly biased) opinion. Some extracts:

Quote

 

The more the following characteristics are present, the more likely it is that there is a reasonable expectation of profit:

  • The digital asset gives the holder rights to share in the enterprise’s income or profits or to realize gain from capital appreciation of the digital asset.
  • The digital asset is transferable or traded on or through a secondary market or platform, or is expected to be in the future.
  • The digital asset is offered broadly to potential purchasers as compared to being targeted to expected users of the goods or services or those who have a need for the functionality of the network.

 

or

Quote

 

Although no one of the following characteristics of use or consumption is necessarily determinative, the stronger their presence, the less likely the Howey test is met:

  • The distributed ledger network and digital asset are fully developed and operational.
  • Holders of the digital asset are immediately able to use it for its intended functionality on the network, particularly where there are built-in incentives to encourage such use.
  • The digital assets’ creation and structure is designed and implemented to meet the needs of its users, rather than to feed speculation as to its value or development of its network. For example, the digital asset can only be used on the network and generally can be held or transferred only in amounts that correspond to a purchaser’s expected use.
  • With respect to a digital asset referred to as a virtual currency, it can immediately be used to make payments in a wide variety of contexts, or acts as a substitute for real (or fiat) currency.
  • The digital asset is marketed in a manner that emphasizes the functionality of the digital asset, and not the potential for the increase in market value of the digital asset.
  • Potential purchasers have the ability to use the network and use (or have used) the digital asset for its intended functionality.

Digital assets with these types of use or consumption characteristics are less likely to be investment contracts.

 

 

I'd also recommend galgitron's blog on that matter which is content-wise well written: http://galgitron.net/Post/To-Be-a-Security-or-Not-to-Be

Edited by karstnDE
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14 hours ago, Caracappa said:


The way Ripple and its senior staff handles the discussion can add some questionmarks. However they were asked multiple times on the spot in interviews (which is a good thing) if XRP is deemed a security. What should they answer other then that they do not believe so. They don't engage the discussion out of nowhere.

The big difference with BTC and ETH for example is that XRP has a (few) company behind it actively developing for it. With that it matches the four points of the howey test although partial discussion is about investment in a common enterprise. Arguments can be met both ways as Ripple holds majority of XRP so they indirectly benefit from investors buying XRP. On the other hand people do not buy directly from Ripple and in that way are not investing in a company. Aside from that, Howey is not the only test court can use to determine if something is a security.

Part of the discussion is also about if these ancient 1933 rules still apply in 2020 to this new kind of assets and if they can be put into existing boxes. Seeing some new proposals enter the discussion makes me bullish on the end result, and explains the time it took. Current cases can only create outcomes into current existing boxes (security, commodity etc) and perhaps that is not the prefered result.

I do not know enough about US law (because... more countries in the world you know) but I do know the US discussion is important. We will hear more on 15th of January correct? 

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.

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14 hours ago, Tinyaccount said:

You mean like an oil company sells its asset (oil) and is naughty enough to use it for its own operations?

I don’t know for sure,  but your text walls remind me of someone trying to look more of an expert than they really are...

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."

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1 minute ago, Sporticus said:

You are obviously not much at rocket surgery, logic  or legal reasoning,

Why thank you kind sir!  If you are of that opinion it boosts my self esteem...   because you seem to get most everything ass-backwards.  :) 

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11 minutes ago, Sporticus said:

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.

Whereas you sir,  are no doubt,  a joy to all around you...   as you light their way with your wisdom and majesty.

DAs are a new asset class.  The regulators have intimated as much.  Your points have all been endlessly debated and debunked here and yet you persist in flowing your speil out in great reams as you copy and paste holus-bolus from the interwebs.  One wonders why...

 

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14 hours ago, Yakuni said:

What do you mean? Are you suggesting bag holders would have a claim against Ripple to compensate their losses? Is that what the lawsuit is aiming to achieve?

That would be a very sad day. 😔

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. 

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21 hours ago, Yakuni said:

What do you mean? Are you suggesting bag holders would have a claim against Ripple to compensate their losses? Is that what the lawsuit is aiming to achieve?

That would be a very sad day. 😔

Yes that what the law suit is about.  It would set a precedent for a class-action law suit against Ripple that all bag holders could join and make a similar claim.  I don't think the initial cases will win, but if the XRP price keeps getting lower and lower, and the current cases did deem Ripple to be selling a security, then the class action law suit will look a lot more tempting to many people.

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3 hours ago, 2ndtimearound said:

Yes that what the law suit is about.  It would set a precedent for a class-action law suit against Ripple that all bag holders could join and make a similar claim.  I don't think the initial cases will win, but if the XRP price keeps getting lower and lower, and the current cases did deem Ripple to be selling a security, then the class action law suit will look a lot more tempting to many people.

But surely the only ones with an actionable case would be those that bought directly from Ripple?  It cannot be that someone buys from Ripple, the price goes up, and the buyer sells at a profit, then buyer 2 makes a loss and sues Ripple?  That would mean every peak and trough would create a new group of plaintiffs?  How much stock did Ripple sell to the public at prices above .06?  

Could a market maker, or exchange, who bought the stock in full knowledge of the risk really sue?

11 hours ago, Sporticus said:

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.

Tiny is actually very well informed on many subjects and has proved himself to have a good and courteous debater willing to learn, give and take in an argument.  I love the metaphor though, and will try to remember it 

Edited by Julian_Williams
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I think that I read somewhere that a typical approach for a defendant  will be to introduce arguments to stall the class action, get an adjournment for several months, then do the same again, repeatedly, on little points, until the claimant runs out of cash and the claim can not continue. I am not a lawyer so don't know if this is true, or even relevant in this case.

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  • 6 months later...

Like any other cryptocurrency, xrp has its drawbacks. I have never met an ideal cryptocurrency (I think it is not even worth remembering the usual currency). If anyone does not know, then recently there was news that about 20% of the cryptocurrency market was under the control of hackers, and when making transfers, they took a small percentage to their account. They have been carrying out such scams for more than one year, so they managed to earn a lot of money. The most offensive thing is that they will go unpunished. By the way, I recently noticed that a new kind of fraud has appeared. An exact copy of the online store is created, as well as a copy of a not very popular cryptocurrency. After the person made the payment, they swap the original and the fake wallet and claim that they did not receive the money. A colleague of mine encountered this problem. It was very difficult to prove him right, the service https://complain.biz helped him with this. If anyone is interested, then I can ask him for details, as I told briefly.

Edited by Evanite
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