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Ripple’s Strategic Footnote: Unveiling The Pre-2018 Ripple Effect, Gaining Jury Confidence

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In a recent development in the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC), attorney Bill Morgan took to Twitter to shed light on an intriguing argument made by Ripple. 

The tweet highlighted Ripple’s decision not to include an argument in its summary judgment motion regarding pre-2018 price rises of XRP being unrelated to Ripple’s activities. However, XRP expressed confidence in prevailing before a jury on this matter.

Interestingly, XRP’s stance on the issue became more pronounced in a footnote within its summary judgment (SJ) Reply brief. The footnote stated that if XRP’s motion to dismiss the SEC’s case is not entirely successful, it should be granted partial summary judgment for the period after mid-2018. 

This request was based on the SEC’s own concession that most XRP price increases during this time were driven by market forces rather than XRP’s actions.

Ripple’s Meritorious Claim: Challenging SEC’s Ability To Satisfy The Third Prong

The argument presented by XRP pertains to the “expectation of profits from the efforts of others” prong of the Howey test, a legal framework used to determine whether a particular transaction qualifies as a security. 

Ripple pointed out that even the SEC’s fifth expert, whose event study showed a correlation between Ripple news announcements and XRP price changes, was barred from testifying about causation.

Furthermore, XRP challenged the third SEC expert’s opinions, as the Daubert decision judge noted that the expert’s views focused on XRP’s actions to influence XRP’s price without directly addressing whether those actions caused a price change.

In addition, Judge Torres did not permit the opinion of the SEC’s first expert, who argued that based on XRP’s design features and XRP’s public statements, a reasonable XRP purchaser would have expected future profits derived from Ripple’s efforts.

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These factors collectively contribute to XRP’s argument that the SEC fails to satisfy the third prong of the Howey test for XRP sales, thereby warranting a dismissal of the case. XRP particularly emphasizes the Court’s consideration of granting partial summary judgment for post-mid-2018 XRP sales.

It is worth noting that XRP’s request for partial summary judgment, mentioned in the footnote of its Reply brief, was made before the Daubert decision. However, the subsequent ruling further bolstered Ripple’s position.

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Ripple CTO Voices Support For Public Disclosure Of Hinman Emails Amid Legal Battle

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Ripple CTO David Schwartz recently voiced his opinion as the crypto industry eagerly anticipates the public disclosure of former SEC employee William Hinman’s documents. In a speech delivered back in 2018, Hinman controversially stated that Ethereum should not be classified as a security.

Ripple’s Stance: Agreement to Keep Hinman Emails Public?

Schwartz’s tweet was in response to a statement made by Mr. Huber, who suggested that if Ripple agrees not to make the documents public, Coinbase could also request access to them. 

Huber, however, expressed doubt that Coinbase would want to involve itself in anything related to Hinman, considering its previous involvement in the matter. According to Huber, Coinbase was already aware of Hinman’s actions back in March 2018.

The Ripple CTO clarified that, although he is not a legal expert, he believed that Ripple would be unable to agree not to release the documents. 

He pointed out that the judge had ruled that the emails were judicial documents, and the public’s right to access them outweighed any other considerations.

In agreement with Schwartz, John E. Deaton, the founder of Crypto-Law.us, emphasized that even if Ripple and the SEC were to settle the case, the emails would still be disclosed. 

Deaton highlighted that Roslyn Layton’s motion to intervene to obtain the emails had been ruled moot since the emails were already scheduled to be unsealed. Therefore, if a settlement were reached, the judge would need to reconsider Layton’s motion.

As the community engaged in the discussion, some participants argued that once the court had classified the Hinman emails as judicial documents for public viewing, the litigants had no say in their release. 

They emphasized that any lawyer suggesting otherwise was simply mistaken. The consensus among these voices was clear: the Hinman emails were no longer a bargaining chip for the SEC and would inevitably be made public.

On a different note, others expressed concerns about Ripple’s involvement in the unfolding events, alleging that the company was using the situation to rally the XRP community while reporting exorbitant legal fees and assembling a large team of lawyers. 

They speculated that this entire saga was a calculated move to dismantle and rebuild the existing financial system.

However, as the crypto industry eagerly awaits the public unveiling of the Hinman documents, the ripple effects of this ongoing legal battle continue to reverberate throughout the community.

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Is Ethereum A Commodity, Security, Or both? Ex-CFTC Commissioner Responds

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It is not contradictory for Ethereum to function as both a security and a commodity, former CFTC commissioner and current SEC Counsel, Dan Berkovitz claimed.

According to Berkovitz, who participated in a podcast hosted by acclaimed journalist Laura Shin, there are specific legal provisions that allow Ethereum to fall under the purview of both the SEC and the CFTC.

The confusion arises from the fact that a commodity only relates to the physical components, like cotton, eggs, and so forth, to a layman. Berkovitz said.

However, anything that is covered by a “futures contract” as stated in the Commodity Exchange Act is likewise considered a commodity. The word “futures” being a part of the CFTC’s name makes sense in light of this.

Regarding the division of jurisdiction, the CFTC is in charge of commodities futures and swaps, and the SEC controls matters pertaining to securities.

Notes, proof of debt, and investment contracts fall under the category of security. While the aforementioned plainly falls under the authority of the SEC, they can also be the subject of a futures contract, which places them under the purview of the CFTC as well.

Furthermore, according to Berkovitz, it is feasible for an asset to be categorized as both a commodity and a security due to the overlap in the legal meanings of the two terms.

Another guest on the podcast, Collin Lloyd, a partner at the law firm Sullivan & Cromwell, challenged SEC chair Gensler’s claims that everything other than Bitcoin should be given “security” status under federal securities law.

I don’t see anything in the case law that tells me that some string of digits that operates on a blockchain can natively just be a security. I think you should be asking, is this digital asset being sold as part of a securities transaction? That depends on the facts and circumstances.

The classification of Ethereum, the second-ranked crypto in the world, has caused more confusion in the US since regulators cannot agree on whether it is a security or a commodity.

Ethereum Classification Debate

At a congressional oversight session held in April, Congressman Patrick McHenry pressed the Securities and Exchange Commission chair about whether Ether is security.

Gensler avoided going into further detail when he declared that everything covered by Bitcoin is secure.

The Commodity Futures Trading Commission, likewise responsible for overseeing the US derivatives markets, also took steps that further demonstrated the lack of agreement in the sector of digital assets.

On 27 March, CFTC filed suit against Binance for engaging in “Willful Evasion” of laws by selling unregistered crypto derivative products.

The regulator’s definition of Ethereum as a commodity in the filing contrasted with the SEC’s classification of them as securities.

Ripple Effect: Unveiling The SEC’s Crypto Conundrum & Its Far-Reaching Impact

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In the midst of the Ripple-SEC lawsuit, the co-founder of Sologenic, Bob Ras, took to Twitter to express his views on the Securities and Exchange Commission’s (SEC) handling of crypto regulation. 

Ras’s tweet highlighted the “Ripple Effects” of the SEC’s aggressive stance, which he believes is having far-reaching consequences within the industry. He further argued that the SEC’s current position on cryptocurrencies is weaker than ever before.

Ras pointed out that the SEC’s attempt to categorize almost all digital assets as securities demonstrate a lack of understanding of the unique characteristics of these new technologies. 

Unnecessary Legal Battles: Ripple & Other Companies Affected

He specifically mentioned companies like Ripple, which are currently entangled in unnecessary legal battles due to the SEC’s oversight.

The co-founder of Sologenic further criticized the SEC’s unwarranted pursuit of crypto projects, suggesting that it has backfired and hindered innovation. Ras claimed that as a result of the SEC’s actions, numerous projects had relocated offshore. 

He emphasized that this issue goes beyond stifling innovation and has broader implications for job creation, investments, and capital loss in the United States.

Ras compared the SEC’s approach to that of an outdated lawmaker attempting to apply archaic laws to a technology they do not fully comprehend. He argued that crypto-assets represent a new asset class, and treating them solely as securities overlooks their distinctive qualities and potential. 

According to Ras, a smarter approach for the SEC would have been to develop a regulatory framework that takes into account the unique nature of these assets.

Recent developments in the Ripple case have shed light on the SEC’s inconsistent stance regarding cryptocurrencies. It has raised the possibility that not all crypto-assets satisfy the criteria to be classified as securities. Ras noted that this revelation could have implications for other companies, including Coinbase.

In light of these issues, Ras urged the SEC to shift from its regulation-by-enforcement approach and adopt a regulatory framework that fosters innovation while safeguarding investors. 

He warned that if the SEC persists with its current approach, it not only risks damaging its reputation but also jeopardizes the United States’ position in the global crypto market.

However, as the resolution of the Ripple-SEC lawsuit approaches, the crypto industry awaits a verdict that could potentially shape the future of crypto regulation in the United States. The outcome will likely be pivotal in determining whether the SEC will reevaluate its approach to cryptocurrencies or maintain its rigid stance.

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Ripple’s XRP Sales To ODL Customers Challenge SEC’s Classification As Investment Contracts

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In a recent Twitter thread, attorney Bill Morgan shed light on a significant challenge faced by the U.S. Securities and Exchange Commission (SEC) in its ongoing case against Ripple. 

According to Morgan, the SEC’s argument that all XRP tokens represent Ripple’s investment contracts is undermined by the “small subset” of sales to On-Demand Liquidity (ODL) customers.

Morgan contends that these sales to ODL customers do not align with any aspect of the Howey test. He argues that since the SEC alleges that ODL customers immediately utilize the XRP tokens as a bridge asset, no investment is involved, no profit expectation, and no common enterprise. Instead, these customers are simply using XRP as a product.

This poses a significant problem for the SEC. If sales to ODL customers are considered exceptions, the SEC’s claim that all XRP tokens are securities or investment contracts loses its foundation. As all XRP tokens are fungible, any exceptions undermine the notion that the asset itself is a security.

Ripple: ODL Sales & The SEC’s Elusive Response

The SEC’s response to ODL sales has been elusive, with the regulatory body employing a series of disparate facts to obfuscate the issue. They argue that until the introduction of the ODL product in 2018, there was no use for XRP. 

They further claim that Ripple primarily did not sell XRP to ODL customers until mid-2020, instead compensating MoneyGram to use XRP for over 90% of ODL transactions.

The SEC also highlights the fact that ODL customers promptly resold any XRP they acquired from the market. Additionally, they note that Ripple repurchased the XRP it sold to protect its price, implying that this behavior does not align with typical commodity sales.

From the SEC’s perspective, ODL served as a mechanism relying on speculative investment-related trading of XRP. The SEC acknowledges some sales of XRP to ODL customers since mid-2020 but classifies them as a small subset. 

They view these sales as an indirect distribution of XRP into secondary markets, potentially involving statutory underwriters or evading registration requirements.

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Curiously, the SEC does not apply the Howey test to any specific sales of XRP to ODL customers. Conversely, Ripple argues that the Howey test does not apply to any of its XRP sales.

Moreover, the SEC’s case faces additional challenges in the form of exceptions. These include XRP giveaways to early adopters and developers and charitable donations. 

The SEC does not claim that the charities were statutory underwriters, indicating that these XRP tokens were not considered securities.

The crux of the issue lies in the SEC’s assertion that all XRP tokens are fungible. However, once exceptions such as gifts, giveaways, and sales to ODL customers are recognized as not being securities or investment contracts, the argument that all other XRP tokens are securities becomes untenable. 

These exceptions cast doubt on the SEC’s claim that XRP is inherently a security, establishing it as nothing more than an asset.

As the case between the SEC and Ripple continues, these exceptions undermine the SEC’s attempt to categorize XRP as a security or investment contract, leaving it in a precarious stance to defend in court.

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Coinbase Escalates Clash With SEC, Files Writ Of Mandamus In Pursuit Of Clarity For Crypto Businesses

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The conflict between Coinbase, a leading cryptocurrency exchange, and the US Securities and Exchange Commission (SEC) has escalated to a higher degree, with Coinbase recently initiating a writ of mandamus against the regulatory entity. This legal step comes after several months of disagreements regarding the necessity of transparent regulations and guidelines for crypto enterprises in the United States.

Coinbase’s action to file the writ of mandamus follows closely after the SEC expressed its lack of urgency in addressing Coinbase’s request for regulatory clarity, dismissing the claims as “baseless.” The writ of mandamus is a legal recourse that entails a formal petition to compel a government agency to fulfill its legal obligations as mandated by statutes.

In its filing, Coinbase emphasized the SEC’s intention to persist in its enforcement actions targeting the crypto industry, specifically addressing the same subjects raised in the cryptocurrency exchange petition while disregarding the petition itself. This approach mirrors the SEC’s previous handling of rulemaking petitions related to digital assets.

Coinbase Seeks Mandamus To Compel Sec’s Response On  Regulatory Clarity

If the SEC rejects Coinbase’s appeal, it could be forced to address the issue of digital asset regulation through a mandamus – a court order requiring government compliance. Exchange claims that the SEC has been unresponsive, failing to offer clear rules despite the exchange’s first request and subsequent court pressure.

Additionally, the cryptocurrency exchange highlighted the SEC’s ongoing enforcement campaign as a notable shift from its previous position of applying securities laws to digital assets. According to the California-based exchange, the SEC now claims the power to pursue enforcement actions against the industry indefinitely, based on undisclosed new criteria.

Moreover, Popolar exchange maintains that if the petition is rejected, the court should oversee the SEC’s activities, urging the commission to advance its efforts in establishing regulations. Seeking a writ of mandamus would require the SEC to respond within seven days.

The legal representatives representing Coinbase concluded by stating:

The Court should retain jurisdiction and order the SEC to explain its delay to date, state when it will respond, and provide progress reports to the Court.

The result of this legal dispute carries substantial consequences for the regulatory framework of the cryptocurrency sector in the United States. If Coinbase achieves a favorable outcome, it could establish a path toward greater transparency and regulatory stability, providing crypto businesses with a more secure and predictable operating environment. Conversely, if Coinbase’s concerns are dismissed or left unaddressed for an extended period, it could perpetuate the current uncertainty and impede the industry’s progress.

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Source: Tradingview.com

Ripple vs. SEC Lawsuit: Controversy, Conspiracy, & The XRP Community’s Resilience

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Ripple vs. SEC Lawsuit Sparks Controversy and Speculation In a series of tweets, John E Deaton, Founder of Crypto-Law.us, expressed his views on the ongoing Ripple vs. SEC lawsuit, shedding light on the motivations behind the case. 

Deaton argued that the lawsuit had surpassed its initial scope of enforcing U.S. securities laws and instead became a weapon with a hidden agenda.

Deaton’s response came after Sam Lyman, a Contributor at Forbes, tweeted about the potential repercussions of the lawsuit. Lyman suggested that the SEC might have bitten off more than it could chew, as the “Ripple effects” from the case could potentially benefit the XRP Army, Coinbase, and the entire crypto industry.

Deaton highlighted the doubts Joe Grundfest, a highly respected former SEC Commissioner, raised regarding the motives behind the lawsuit. He also pointed out that Ripple had assembled a formidable legal team, including former high-ranking SEC officials and accomplished attorneys, indicating that $200 million had been invested strategically.

The unexpected unity of the XRPArmy and the support of 75,000 individuals caught the SEC off guard. This groundswell of public backing could potentially impact the case outcome and force the SEC to reconsider its approach.

Ripple’s Impact: Speculation & Unity In The XRP Community

Community members also chimed in with their perspectives. Some claimed that the lawsuit was primarily focused on MoneyGram, as Ripple’s alternative financial solutions posed a threat to traditional corresponding banking. Others speculated that a settlement might be imminent to allow the SEC to shift its attention to other crypto projects.

Intriguingly, references were made to hidden agendas and the involvement of Bitcoin maximalists who harbor a deep-rooted dislike for Ripple. The accusations of misinformation and tribalism within the crypto space fueled the controversy surrounding the case.

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Despite the uncertainty and lengthy legal process, members of the XRP community expressed resilience and optimism. They viewed the lawsuit as an opportunity to gain a deeper understanding of the legal system and to highlight the potential of XRP beyond the scope of securities violations.

However, some individuals demanded more than just financial compensation. They called for accountability, urging figures such as Clayton, Hinman, Herren Lee, and Crenshaw, among others, to face severe consequences for their alleged corrupt actions.

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Nevertheless, as the lawsuit unfolds, it remains a contentious topic, stirring speculation and raising questions about the motivations and implications behind the legal battle. However, the outcome of this case will undoubtedly have far-reaching effects on the future of Ripple, the crypto industry, and the regulatory landscape.

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Ripple vs. SEC: John E Deaton’s Insight On Delayed Release Of Crucial Documents

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In a recent development in the ongoing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), anticipation grows as the court-ordered release of key documents draws near. 

John E Deaton, Founder of crypto-Law.us, took to Twitter to share his thoughts on the matter, sparking a wave of discussion within the crypto community.

The catalyst for Deaton’s comments was a joint letter filed by the parties involved, requesting a one-week extension until June 13th, 2023, to submit unredacted versions of cross-motions for summary judgment and accompanying exhibits. 

This extension aims to provide public access to these crucial documents, including the highly anticipated Hinman materials. Deaton highlighted the significance of this development, implying that the delay in releasing the documents was not indicative of settlement discussions. 

He speculated that if the Hinman emails were likely to lead to a settlement, it would have happened before they were handed over to Ripple. According to Deaton, this implies that the SEC has accepted the eventual public disclosure of the Hinman emails.

Addressing the community’s curiosity regarding the document release, Deaton mentioned that multiple parties, including Dragonchain and Coinbase, would undoubtedly seek access to these documents once they were made public. He also referenced the intervention of Roslyn Layton, emphasizing the importance of public access to these materials.

Meanwhile, the SEC recently filed a joint request for the extension; Deaton expressed doubts about the SEC’s intentions, suggesting that filing an appeal or writ of mandamus after seeking the extension would be highly unlikely. He remained confident that the documents would ultimately be released.

Ripple Community’s Anticipation For Document Release

Acknowledging the differing opinions within the community, Deaton welcomed the healthy debate surrounding the case. He emphasized that speculation plays a significant role in these discussions, but sometimes the most obvious answer turns out to be the correct one. 

Deaton also posed a thought-provoking question about the extent of Ripple’s potential legal fees, considering the extensive review process required for each document’s redaction, both by Ripple’s legal team and the SEC.

Nevertheless, as the crypto community eagerly awaits the release of these documents, the implications for Ripple and the broader cryptocurrency industry remain uncertain. The community fervently hopes for a resolution, but the outcome of this legal battle will shape the future landscape of digital assets.

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Ripple Vs. SEC: Document Unveiling Date Extended Until June 13th

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In a recent development regarding the legal battle between the Securities and Exchange Commission (SEC) and Ripple Labs Inc., attorney James K. Filan took to Twitter to provide updates on the timeline for the release of certain documents. 

Attorney Filan initially tweeted that the parties involved had filed a joint letter requesting a one-week extension until June 13th, 2023. This extension was sought in order to file public, unredacted versions of cross-motions for summary judgment and accompanying exhibits, including the Hinman materials. 

However, Filan later announced that the request for an extension had been granted, allowing for additional time to submit the documents.

This recent development comes after an order issued by the court on September 12th, 2022, which granted the involved parties a 21-day period to submit public versions of Summary Judgment documents. 

These versions were required to adhere to the guidelines outlined in the sealing ruling. Based on this order, it was expected that the documents would be unveiled on June 6th, 2023.

In the joint letter submitted to the court, the SEC and Ripple Labs, along with defendants Bradley Garlinghouse and Christian A. Larsen, collectively referred to as the “Parties,” requested that the court order them to file public, redacted versions of their cross-motions for summary judgment and accompanying exhibits on June 13th, 2023. 

Ripple Community Eagerly Awaits Unredacted Documents In SEC Lawsuit

This new deadline is one week later than the previously anticipated date of June 6th. The Parties cited the voluminous nature of the materials and the need for redactions as reasons for seeking the extension. It is worth noting that this is the first request to extend the deadline.

In their letter, the Parties also highlighted that a similar timeline had been approved by the court for the filing of public, redacted versions of the Daubert motions, which were less voluminous than the materials in question. 

This reference suggests that the court has been accommodating in granting extensions to allow for the careful preparation of redacted documents.

The ongoing legal dispute between the SEC and Ripple Labs has been closely followed by the cryptocurrency community, as it has significant implications for the regulation of digital assets. 

Many stakeholders are eagerly awaiting the release of the unredacted documents, including the Hinman materials, as they may provide crucial insights into the SEC’s stance on cryptocurrencies and their potential classification as securities.

As the case continues to unfold, market participants and cryptocurrency enthusiasts will closely monitor any further updates and announcements related to the SECGov v. Ripple litigation. 

The extended deadline for filing public, redacted versions of the cross-motions for summary judgment and accompanying exhibits marks another milestone in this high-profile legal battle.

Ripple’s Defense: The Significance Of 56.1 Statements & The Fair Notice

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John E Deaton, the founder of Crypto-Law.us, recently took to Twitter to express his thoughts on the ongoing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). 

In response to an article by DJ Peter Vas, which highlighted attorney Jeremy Hogan’s view on the case, Deaton emphasized the significance of the 56.1 statements and counter statements filed by the parties.

Deaton pointed out that without access to these statements, it is challenging for anyone to accurately assess the evidence submitted by both Ripple and the SEC. 

He highlighted an intriguing argument made by the company in its summary judgment brief regarding the presence of written contracts in certain XRP sales. 

The company contends that since these contracts did not impose post-sale obligations, offer equity, or allow buyers to demand anything from it, they should not be considered investment contracts.

Expressing his opinion, Deaton disagreed with the company’s underlying contract argument and anticipated that Judge Analisa Torres would not support it either. Additionally, he believed that the fair notice defense presented by it should be seen as an insurance policy. 

If the judge determines that the company violated Section 5 by engaging in investment contracts, the jury would then decide if Ripple had fair notice of these violations.

Deaton also discussed the ongoing debate about sealing certain documents, such as the Hinman emails, and speculated on a possible split decision. 

He suggested that while the company might face the consequences of early XRP sales, the judge could classify its ODL and secondary market sales as non-securities. This outcome and the argument for fair notice could lead to a total victory for the company.

The outcome of this legal battle remains uncertain, and opinions vary on the potential consequences for Ripple. However, analyzing the 56.1 statements and counter statements and the judge’s decision regarding sealed documents will play crucial roles in determining the outcome.

Community Response: Jury Trial Or Judge’s Decision In The Ripple-SEC Case

The community expressed diverse opinions in response to John E Deaton’s tweet regarding the possibility of a jury trial in the case. One individual questioned whether leaving the decision to a jury was the best approach, considering Judge Analisa Torres’ expertise in the field. They raised concerns about how jurors with pro- or anti-crypto biases would be selected.

Others in the community characterized a jury trial as more of a theatrical performance. They emphasized the importance of voir dire, eliminating jurors based on lawyer questioning, which can heavily influence the trial’s outcome. They noted that jury trials are often seen as high-stakes gambles, leading to many cases settling before reaching that stage.

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However, some community members pointed out that, in this particular case, the stakes are significantly asymmetric. They argued that the SEC has much to lose, including setting Fair Notice (FN) precedents and potentially damaging its reputation by disclosing corruption evidence, such as the Hinman emails. 

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