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Jeremy Hogan: Will Ripple's Fair Notice defense survive?


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But just for once @xerxesramesepolybiusis probably right. As far as we can ascertain from the legal filings - Ripple actively avoided the SEC despite whining about legal clarity because

a) They knew the SEC would say. F-No!

b) They preferred to ask forgiveness later than permission first.

There were no legal guidelines other than the Howey test and whilst the SEC has hosed things up big time, Ripple clearly knew exactly what they were doing and have gamed the system all the way. 

 

Having said that, for me the trial is all but over now. After the Judge has denied access to the legal docs that Ripple received, there's no way the SEC can risk losing the case and setting legal precedent. They surely must settle.

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1 minute ago, jbjnr said:

But just for once @xerxesramesepolybiusis probably right. As far as we can ascertain from the legal filings

Still being a sourpuss. Only shows up here to be negative. I don’t like his intentions because even if that was in the original filing, it doesn’t matter anymore because their motion to look into the legal advice that Ripple received regarding the issue was denied. 

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2 minutes ago, Neurotoxin said:

Still being a sourpuss. Only shows up here to be negative. I don’t like his intentions because even if that was in the original filing, it doesn’t matter anymore because their motion to look into the legal advice that Ripple received regarding the issue was denied. 

Hey! Careful not to paint all guys with a broad brush!  (did that once in college).... We shouldn't assume the sex of anybody without any evidence, if you get my drift.... wouldn't want to be accused of mysogyny... 

 

 

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Posted (edited)
14 minutes ago, FOOD said:

Hey! Careful not to paint all guys with a broad brush!  (did that once in college).... We shouldn't assume the sex of anybody without any evidence, if you get my drift.... wouldn't want to be accused of mysogyny...

I don't mind being accused of it, really - it's a cheap "run the **** away from cray-cray" signal, if catch it early...

Content of character over color of skin?  You bet - all day long.

Quality of idea over characteristics of who presents it?  MERIT!

"Lion King?  Yes.  Soundtrack?  Absolutely!" -Janeane Garofalo

Edited by NightJanitor
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3 hours ago, Neurotoxin said:

 could you AT LEAST be so kind as to post the source of the claims so everybody can go and read it for themselves since you already took the time to google it once again and copy and paste your favorite parts of the article in question? Or maybe you have it in your notepad without a source because it’s just a section of notes full of collections of negative things to say to us.

I clearly mentioned the post in my comment, here is the link.

Call it FUD it you like, I prefer to use the term "facts". Objective reality is necessary for all investors to make sensible decisions

https://www.sec.gov/litigation/complaints/2020/comp-pr2020-338.pdf

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2 hours ago, jbjnr said:

Having said that, for me the trial is all but over now. After the Judge has denied access to the legal docs that Ripple received, there's no way the SEC can risk losing the case and setting legal precedent. They surely must settle.

It's a fair point @jbjnr but if you look at the history of the civil cases brought by various US regulators going back even to the dotcom era. there is almost always a settlement. The question is what is the nature of the settlement?

Slap on the wrist fine for Ripple or big fined $1 Billion and stopped from doing anything to do with XRP. Big range of outcomes.

Basically the SEC know Ripple avoided trying to get clarity on the security issue. Asking for copies of the advice from lawyers was probably going too far. It would have completed the picture but it does not negate the evidence they already have.

There is plenty more evidence the SEC can win on.

 

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12 minutes ago, xerxesramesepolybius said:

Slap on the wrist fine for Ripple or big fined $1 Billion and stopped from doing anything to do with XRP. Big range of outcomes.

Ripple have to agree to the terms, if the SEC push for too restrictive  rules on xrp, then ripple can just say, "thanks, but no thanks - we'll take our chance in court".  Anything less than complete freedom to use xrp for ODL, LoC would be a 'no'. Restrictions on future (open) sales of xrp (e.g. only to qualified investors/businesses) might be okay.

I guess we'll find out one way or another. Hopefully soon, probably not.  

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My take is that the SEC are much lower on the pecking order than most people think, this case will not stop what IMO, has already been decided at a much higher level between global elites. The great reset, the digital switchover is coming and nothing especially this SEC case will stop it from happening.

 

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Here's an example of how you can interpret Ripple's actions as avoidance rather than evasion. The SEC lawyers obviously frame everything as Ripple evading being caught selling a security, but Ripple is going to argue the opposite that they weren't selling a security and were doing everything they could to avoid having XRP declared a security.

8 hours ago, xerxesramesepolybius said:

The October 2012 Legal Memo also advised Ripple and Larsen to contact the SEC
to obtain clarity as to whether XRP was a security under the federal securities laws.
56. By at least 2013, Larsen was aware of the contents of the Legal Memos.

Avoiders seek legal advice to avoid breaking the law. Evaders seek legal advice to mitigate their risk of being punished by the law. The avoider knows there is risk, but does everything he can to operate legally within the gray area. Lawyers advise clients not only on the contents of the law, but how to avoid trouble with the law. Most lawyers will tell you not to talk to the police directly, but talking to the police isn't illegal, it just carried increased risks. We can see a similar thing with US exchanges delisting XRP. It's likely that they could list XRP without breaking the law, but they don't want to take that risk. If an exchange does choose to risk it, that doesn't necessarily mean they're doing anything illegal. Ripple's legal advice was a mix of advice on what the law itself actually said and their assessment of how to avoid risk. Lawyers by nature are going to advice you to take the least-risky path, but Ripple choosing not to follow all of their advice isn't illegal, simply riskier.

It's also important to note that this almost certainly was not the only legal advice that Ripple got. I know when I first found out about them in 2014, they were already hiring board members with political connections precisely so they could navigate these tricky regulatory waters. They would have received advice from a variety of perspectives.

8 hours ago, xerxesramesepolybius said:

57. On May 26, 2014, Larsen explained in an email to an individual formerly associated
with Ripple that the international law firm that wrote the Legal Memos advised “that investors and
employees could not receive XRP” because that “could risk SEC designation [as] a security.” Larsen
also explained that the XRP he received upon Ripple’s founding was “comp[ensation] for . . .
personally assuming th[e] risk” of being deemed the issuers of securities—namely, XRP.
58. In other words, as Larsen himself explained, he was paid at the outset in an asset
(potentially worth hundreds of millions of dollars) to assume a risk he knew existed—that the sale of
the asset could constitute an offering of securities for which he would be held responsible.
Case 1:20-cv-10832 Document 4 Filed 12/22/20

Look at this. The very fact that there is a risk that XRP would be deemed a security means that it wasn't deemed a security. I hope Ripple's lawyers tear through this argument. The SEC basically admits right here the Ripple was doing something that wasn't clearly defined as a security but also wasn't clearly defined as not a security. If Ripple truly thought XRP wasn't a security but knew there was a risk the SEC could rule against it in the future, the founders taking on all that risk and compensating themselves for it makes sense. It also makes sense if they knew it was a security and were just trying to get away with it for as long as they can. The SEC either needs to objectively prove that XRP is a security and whatever Ripple thinks about it doesn't matter, or it needs to be able to find subjective evidence that Ripple was intentionally selling what it thought was a security.

8 hours ago, xerxesramesepolybius said:

59. Despite this knowledge and Larsen’s familiarity with Section 5 from the SEC
enforcement action that his previous company had settled in 2008 while Larsen was its CEO, Ripple
and Larsen failed to heed some of the legal advice and warnings in the Legal Memos. Neither
contacted the SEC to obtain clarity about the legal status of XRP before engaging in a large-scale
distribution. Moreover, as described in more detail below, Ripple and Larsen (and later
Garlinghouse) offered, sold and promoted XRP as an investment—precisely the type of conduct the
Legal Memos had warned could lead to a determination that XRP was a security

If he wasn't selling a security he had no legal requirement to contact the SEC. This is basically the SEC's whole case: If XRP is a security, then Ripple did X, Y, and Z. Well you've got to prove the "If" first. None of those things are wrong if XRP isn't a security.

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1 hour ago, brianwalden said:

If he wasn't selling a security he had no legal requirement to contact the SEC. This is basically the SEC's whole case: If XRP is a security, then Ripple did X, Y, and Z. Well you've got to prove the "If" first. None of those things are wrong if XRP isn't a security.

Well their argument on the "It" seems to come down to the Howie test. Where we will see what happens but

they continually talked about the need for "regulatory clarity" while doing every possible to avoid going near a regulator that could have given them clarity so they could continue selling XRP.

but to quote Cory Johnson when still a Ripple executive

"I think when the SEC takes a good hard look at this and we know they are starting to do some of that work they are going to recognise I suspect that XRP is clearly not a security"

 

 

 

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