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Worst-case scenario for XRP?


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XRP cannot be declared a security, because the asset is global and non-contractual.  Amazing people still don't understand this after years. It is not the ASSET that is the security, but the TRAN

when Brad and Ripple got litigated by the courts in 2018, we all blindly focused on ripple's grandiose explanations that "xrp is not a security" because of the usual talking points "exxon owns a lot o

Thanks for this great summary, XRP is just an ordinary alt-coin, good for short-term speculation : hyped with no real use case

Brads note to Ripple employees:

https://ripple.com/insights/the-secs-attack-on-crypto-in-the-united-states/

Here’s the note I sent to Ripple employees yesterday – we remain confident after reviewing the SEC’s complaint today that we are on the right side of the law and of history.

 

Last part:

Like I said, I think the claims are misguided and defy basic logic. Regardless, I’ve obviously never had an assertion like this before, and am taking it very seriously. I hope that you all understand the gravity of the situation too.

What I DON’T want is for you to worry. We will get through this, and we will prove our case in court. We have a phenomenal legal team and like I said, we are on the right side of the law to begin with. Know, however, that the legal system is slow, and this is just the beginning of a long, civil process. 

No matter what twist and turns are ahead, we will stand by our employees, shareholders and customers. It’s still business as usual – we need to stay focused and continue to deliver the value that hundreds of customers around the globe have come to expect from Ripple. Although the SEC’s decision brings an even greater sense of urgency to our decision whether to move our HQ outside the US, we also look forward to working with the new Biden administration to see if we can find a rational path forward here. 

Nothing will fundamentally alter our trajectory. We are extremely fortunate to be in a position that we can fight this, and aggressively defend our company, this team, our products and – at a fundamental level, the industry as a whole. 

Best,
Brad

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9 hours ago, tulo said:

The absolute worst case I see, but with low probability to happen is that XRP is considered a security.

-Ripple will receive a huge fine

-Most of the exchanges will delist it because of illegal selling of unregistered securities.

-Price and volumes will plummet.

-The utility and use case of XRP will be lost.

9 hours later and you've nailed 2 out of 4 - not shocked if you go 4 for 4

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7 minutes ago, elppir said:

It is not looking so good, if this dumping continues sec wins for sure. The strange thing is, people are buying, who would do that at a time like this?

I sure wouldn't be buying at this time.  My guess people are hoping SEC lawsuit turns favorably for Ripple and XRP, considering Jay Clayton resigned today and new SEC Chair will be filled by Biden administration early next year.

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10 hours ago, thinlyspread said:

For now, I think the price will stagnate asinstitutional money flows into BTC/ETH and cannot touch the more risky XRP until this is over.

This is just a tiny insignificant tadpole, a mere 20m – nothing compared to institutional funds, but there's no doubt some of the bigger funds are going to have to sell, or more rather, just not start buying XRP until there's clarity. :( 

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Worst-case scenario for XRP?

XRPL transactions fail the Howey test. For that reason alone, XRP cannot be security. The XRP token has a direct use in the XRPL network as a bridge currency, payment currency, transfer vehicle and spam protection. XRP adds value. Like gold or oil, the XRP token is a commodity or exchange object for a higher purpose and not a pure investment object with the promised prospect of a profit target.

If, contrary to all logic, XRP should actually be rated as security, then banks could buy XRP on the NYSE floor as a pure investment property. But then I vaguely doubt that banks can actually use these "XRP.S" via the XRPL network (e.g. via xRapid, R3 Corda or Coil or whatever).

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12 hours ago, thinlyspread said:

I think Ripple will settle, pay a hefty fine, draw up a legally agreed distribution/wind-down plan, and we all carry on. 

According to the SEC suit, something like ~90% of Ripple's income still comes from XRP sales. If their legal team advises them at this juncture to discontinue sales of XRP as a precautionary measure - as I believe they might - then in the absence of alternative ways to replace that income they will need to trim a lot of fat, optimise operations and lay off a (large?) number of employees.

If they decide to continue with XRP sales, then this might be construed as a flagrant disregard for the law - something which could work against them later on. Should the SEC win the case, then any remedial action that involves significant divestment (or burning) of XRP may also have implications for the survival of the business.

Edited by JA8
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51 minutes ago, Karl said:

XRPL transactions fail the Howey test. For that reason alone, XRP cannot be security.

This is not a true statement.  The SEC and Supreme Court do not currently have any legal precedence set yet defining this is a requirement in order for XRP to be clarified a security. So at this time, this cannot be used as a defining factor to confirm if XRP is a security. This will be for them to determine, not you.

They have other factors that they will be using determine if XRP is ultimately classified as a security: https://consumer.findlaw.com/securities-law/what-is-the-howey-test.html.  We will find out next year if and how much factors like XRPL transactions coming into play for final clarification on XRP being a security.

 

Quote

 

Substance Over Form

In deciding Howey, the Supreme Court created a test that looks at an investment's substance, rather than its form, as the determining factor for whether it is a security. Even if an investment is not labeled a "stock" or "bond," it may very well be a security under the law, meaning that registration and disclosure requirements apply. After the creation of the Howey Test, some promoters masqueraded securities to try and escape registration requirements (such as by calling an offer of securities an interest in a general partnership). To deal with these charades, courts look at the economic realities behind an investment scheme, rather than at its name or form, to determine whether it is a security.

If an investment opportunity is open to many people, and if investors have little to no control or management of investment money or assets, then that investment is probably a security. If, on the other hand, an investment is made available only to a few close friends or associates, and if these investors have significant influence over how the investment is managed, then it is probably not a security.

 

 

Edited by wogojump
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13 hours ago, thinlyspread said:

Don't see that happening personally. I think Ripple will settle, pay a hefty fine, draw up a legally agreed distribution/wind-down plan, and we all carry on. For now, I think the price will stagnate asinstitutional money flows into BTC/ETH and cannot touch the more risky XRP until this is over.

That's the issue.  Institutions can't/won't invest in XRP while this drags out.  It could be a year or two.  I reduced my stack yesterday to a comfortably small level....I'm all for XRP but I'm part of the group waiting for some clarity to buy back in again (which for sure, I will do). I realised a small loss, I'll no doubt be buying again in the future...if you're uncomfortable, make yourself comfortable.

Edited by 2ndtimearound
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