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My running analysis of the SEC v. Ripple, Larsen et al


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7 minutes ago, Julian_Williams said:

Well, XRP has gone up 30% since the SEC lawyer made his statement that only Ripple and Ripple employees were selling securities.  Maybe just speculative money, but it seems to show how much avoidable damage SEC inflicted by sitting in this information before telling XRP investors.  (Including driving some to suicide and I am sure breaking the finances of others).  Surely there has to be some sort of investigation is required to find our why they did not protect the public in such an obvious way?

Didnt realise we are up again... Surely this is nothing but speculation, but still nice to see. 

I try to not focus on price too much the next weeks because i think btc could once more correct to 38-40k before the bulls continue. And i think that would be very healthy for this bull run to not end too quickly... 

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This brings us to the latest development from the hearing yesterday regarding the SEC's request to access Brad/Chris's bank accounts as part of discovery. The question arises as to how the hearing aff

I've already commented in separate threads how I think the SEC case is playing out and what it means for XRP, Ripple and the broader crypto ecosystem.  Some people have asked me to consolidate th

You are correct that I wasn't confident of a good outcome. However it goes further than just the outcome of the case. It extends to the fact that a redemption clause was there in the first place for T

4 hours ago, Neurotoxin said:

I am unfamiliar with this, would you mind recapping or giving me a link to your thoughts regarding this? It would be greatly appreciated. 

Please refer to my post above.

TLDR: I flipped the majority of my XRP into other projects on the basis that I could generate far better returns in the short term. I did it at a significant loss at the time but thankfully I have exceeded my targets by a very long margin. I get the benefit of the Flare airdrop and I am free to trade XRP so I won't miss out on any XRP upside. Seemed like the easiest trading decision I've ever made.

But let me emphasise - I made this decision for myself and I do not recommend people make any trading decisions without looking at all relevant factors including their appetite for risk, tax consequences and volatility of this market. If you still believe XRP can go 5X, 10X, 20X, 100X or even 1000X from here, feel free to trade accordingly. I just don't see any of these scenarios for myself and that's all that counts.

 

1 hour ago, Hero_Member said:

@Pablo Can you also paint the broad picture for non-US XRP holders? I'm unsure if we can join any class action, and pretty sure the SEC won't pay us any damages...

For those of us outside the US, it's not a great position to be in because we are all stuck in the same holding pattern. The one advantage is that we can still trade XRP which is going to be helpful when the Flare airdrop starts later this year.

Assuming the SEC is successful, it's still possible that non-US residents could apply to the Fair Fund. It will depend on the terms of the Fund and also depends on Ripple as they are fighting the SEC on jurisdictional grounds as well. Ripple will fight disgorgement so if they can limit disgorgement to US investors of XRP, they will. 

In the event there is full disgorgement and the terms of the fund allow it, there are recent examples where non-US residents have been able to claim against the Fair Fund as long as they file the appropriate IRA forms (which would probably include paying some form of withholding tax). 

I haven't looked into the class action applicability for non US citizens although many people outside the US have joined John's class action even if only to remind the SEC of the numbers of people affected by their litigation.

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On 3/21/2021 at 12:20 PM, Julian_Williams said:

SEC have failed to explain and give guidance to Ripple to protect the public

SEC have have failed to explain and give guidance on the parameters of their case against Ripple and by doing so failed to protect the investors  in the secondary market which they casually (as if everyone already knew this) in court proceedings tell us CANNOT have done anything illegal, since section 4 does not apply to the secondary market.  All SEC had to do to protect the public, and America's place in crypto industry) was to give some elementary guidance. 

I've seen this argument used but in retrospect it's really hard for me to accept given the repeated, unambiguous statements made by the SEC since 2017 and the huge number of successful prosecutions ending with Kik. 

We can't say we weren't warned. I took a bet that Ripple would be left alone. Ripple gave me the impression they would be left alone and would work with regulators including the SEC. I bet wrong. It's really that simple. I'm not getting emotional - I'm just going to be ruthless with my investment.

Here are all the prosecutions going back to 2017 - the SEC didn't lose a single one: https://www.sec.gov/spotlight/cybersecurity-enforcement-actions

Here's Jay Clayton's announcement in Dec 2017 warning investors of the securities issues: https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11

Here's an official warning from the SEC on its investor friendly website: https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-16

What's the first bullet point? This is July 2017 - nearly 4 years ago:

image.thumb.png.8d72afb9971e7e7d31a1810e8439afe1.png

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On 3/20/2021 at 6:52 AM, Pablo said:

And since people ask about Jed - here are my views on why I think he avoided being prosecuted as well as an explanation of how the SEC got hold of the crucial evidence comprising of the legal advice given in 2012:

Many thanks for your excellent summaries and comments, @Pablo.

Regarding the Jed piece of the picture, I agree with your take. But I do think there is one important thing to consider when asking why Jed has not been named as a defendant, which is that, while he was granted a very large amount of XRP as a founder and took possession of it while associated with Ripple, at most a very small percentage of sales and an even smaller percentage of dollar value exchange could have been executed while Jed had decision-making power at Ripple and was privy to any new inside information. Whether or not Jed provided information to the SEC, the fact that probably >99.9% of Jed's USD/XRP exchanges -- as a third party/on the secondary market -- and the great deal of Ripple's sales took place after he left the company. This may be more than enough for the SEC to ignore any role or sales before his departure and "xrp sales incoming."

Though Jed may or may not have a role in this lawsuit, I do think that this case could be bad news for Jed (and others) in the long run. If this case opens up even the possibility of suits brought by the SEC or third parties, Stellar, the Ethereum Foundation, and any other cryptocurrency organizations and their founders and executives who participated in ICOs or token sales touching the U.S. market will be targets. 

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15 minutes ago, RambeauTeasebox said:

Though Jed may or may not have a role in this lawsuit, I do think that this case could be bad news for Jed (and others) in the long run. If this case opens up even the possibility of suits brought by the SEC or third parties, Stellar, the Ethereum Foundation, and any other cryptocurrency organizations and their founders and executives who participated in ICOs or token sales touching the U.S. market will be targets. 

Agreed. The lawsuit against Ripple is neither the beginning nor end of the prosecutions in this space. Ripple is actually the last in a very long line of projects to have faced the ire of the SEC.

The prosecutors at the SEC love big scalps. Does Gensler put them on a leash? Or does he let them rack up some more big scalps like ETH and Stellar? This isn't just about Gary Gensler - he has a few hundred staff and their careers to think about too so it's an interesting dynamic to say the least!

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16 hours ago, Ironhalo said:

The thing that I find so compelling about XRP (despite spending a lot of time swearing under my breath) is the fact that there is an awful sense of serendipity regarding the timing of calamitous news/actions against XRP. Recall in 2017 when off the back of being the best performing crypto that year, and on approaching BTCs market cap, we magically had CMC pull the South Korean exchange prices from their site - resulting in a near 30% collapse in the price instantaneously and bringing the bull run to an end right there and then. Fast forward to 2018-19, XRP overtakes ETH and suddenly (as it appears in retrospect), the SEC starts amassing a case against Ripple for securities fraud - despite Ripple execs and Ryan Zagone saying they have been either, working with regulators for clarity or literally begging for the same clarity on-stage with SEC reps at numerous plenary talks/conferences in that intervening time. During the commencement of the next bull run, and with XRP starting to fly to 80c, Clayton drops the Wells Notice, and walks out the door to greener pastures the next day with his exec team in tow. I abhor conspiracy theories, but in light of Hinman's financial involvement with the ETH foundation and Clayton's subsequent employment to a Ripple competitor, it all reeks.

In saying that, I will be the first to throw rocks at Ripple as well. The decision by Brad/Chris to cash in half their XRP to the tune of 9 figures before XRapid was in commercial production while not strictly illegal, is morally indefensible. Considering Brad was driving Ubers for extra cash between tech exec jobs a scant few years prior, the decision to pay oneself so comprehensively from what was at that stage a fintech startup (albeit a promising one) is just bizarre. I would have no problem with him and Chris paying themselves a few million from private XRP sales, but 9 figures each for a few years' work? Come on.

Regardless of my thoughts on that issue, I lean towards this being drawn out, but I think Ripple will ultimately come out on top, and vicariously, so will XRP holders. One thing that this case has highlighted to me though is that the SEC motives for bringing the case stink to high heaven, but more importantly, Ripple absolutely don't give one flying iota about the retail investors who have arguably driven liquidity for XRP over the last 8 years or so. 

Position yourself accordingly regarding your XRP holdings.

 

 

One word: refreshing. 

Great post! This is exactly my feeling about all of this. 

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19 hours ago, Pablo said:

What's the first bullet point? This is July 2017 - nearly 4 years ago:

image.thumb.png.8d72afb9971e7e7d31a1810e8439afe1.png

Reading this in 2017 it would give me reason to buy a cryptocurrency that was already out for years and never had an ICO.

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12 hours ago, Ripley said:

I hope and expect that once this lawsuit is cleared up, there will be a lot more development activity on the XRPL.

Agree with your analysis and the above conclusion. There'll be lots more good that can happen after the lawsuit is resolved (either way I might add) and much less of the bad things. Elsewhere on the forum, I've referred to the SEC lawsuit as Ripple's Crossing of the Rubicon and every enduring company has had to face several of these moments during its history. Corporate history is littered with near-death experiences.

It's also not the end of the lawsuits that Ripple will face as they grow. Just wait for the endless securities fraud type lawsuits after Ripple's IPO. Got to keep the lawyers busy, right? :D

 

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51 minutes ago, Pablo said:

It's also not the end of the lawsuits that Ripple will face as they grow. Just wait for the endless securities fraud type lawsuits after Ripple's IPO. Got to keep the lawyers busy, right? :D

 

Wish I could buy Ripple stock right now while it’s under scrutiny by the SEC. Would be a potentially massive ROI. 

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1 hour ago, Neurotoxin said:

Would be a potentially massive ROI. 

Possibly - but some of the smart money was very keen to get out as soon as the SEC filed. Buying stock in Ripple would be taking a bet against insiders like Tetragon. I don't know what metrics they originally used but they must be calculating a lower or longer ROI than originally planned and I think that view has merit. There is still the real possibility that Ripple will need to restructure and rebuild if their XRP sales are curtailed.

That won't make any difference at all to XRP speculation but it might to a stock holder.

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