Speculations continue to rage within the XRP community on when the lawsuit between Ripple, the US-based cross-border payment firm, and the United States Securities and Exchange Commission (SEC), would end.
As the XRP community anticipates, John Deaton, the founder of CryptoLaw, has highlighted 16 facts that prove that the case is dead on arrival for the SEC, which implies that the case would end in favor of Ripple and XRP.
Read Also: Rumors Spreading That Ripple-SEC Lawsuit Has Ended In Settlement; Ripple CEO’s Comments Give Hints
16 Facts That Prove the SEC Would Lose the Case
John Deaton’s first point comes from the early days of the crypto ecosystem, 2012. He said back then, both Jesse Powell (Kraken CEO) and Ripple co-founder Jed McCaleb (Now the founder of Stellar Lumens), received a legal opinion letter from Perkins Coie, which says the sale of XRP to investors and the use of the money for operational costs could make XRP become an investment contract or security.
John Deaton tweeted, “On February 8, 2012, @jespow & @JedMcCaleb received a legal opinion letter from Perkins Coie informing them if they sell XRP to investors and use the money for operational costs, XRP will likely be an investment contract aka, a security.”
16 FACTS PROVING THE CASE IS DOA
1) On February 8, 2012, @jespow & @JedMcCaleb received a legal opinion letter from Perkins Coie informing them if they sell #XRP to investors and use the money for operational costs, #XRP will likely be an investment contract aka, a security.👇 https://t.co/HpCkVPfMID pic.twitter.com/L4iEnAwS89
— John E Deaton (@JohnEDeaton1) March 7, 2022
Second Point: He said after the two executives received a legal opinion letter, they both decided to abandon the old business model to seek VC funding for business operations.
He wrote “After receiving the above legal opinion letter, Chris Larsen and Jed McCaleb scrap the old business model and instead seek VC funding for business operations. Investors will not receive XRP, but instead, receive actual shares of stock in the company Ripple.”
Third Point: After about 8 months, the two Ripple executives received another legal opinion letter from Perkins Coie, which says the new business model adopted makes XRP most likely not an investment contract.
“Larsen and McCaleb received a 2nd opinion from Perkins Coie on October 19, 2012. Based on the new business model, they are advised XRP is most likely NOT a security. The letter hints at risks related to Banking Secrecy Laws and being labeled a Money Services Business.”
3) Larsen and McCaleb received a 2nd opinion from Perkins Coie on October 19, 2012. Based on the new business model, they are advised #XRP is most likely NOT a security.
The letter hints at risks related to Banking Secrecy Laws and being labeled a Money Services Business.👇 pic.twitter.com/IJRRHfX00E
— John E Deaton (@JohnEDeaton1) March 7, 2022
Fourth Point: CryptoLaw founder wrote, “In 2015 Ripple was sued by FinCEN. Consistent with risks referenced in the legal memo, FinCEN declared a subsidiary of Ripple a Money Service Business and classified XRP as: “convertible virtual currency.” Ripple settled for $700K and agreed to register sales w/ FinCEN.
“Pursuant to the terms of the settlement w/ DOJ & FinCEN, Ripple agreed to register sales of XRP ONLY through FinCEN. The agreement forces Ripple to comply with the Banking Laws of the United States – not securities laws.”
Pursuant to the terms of the settlement w/ DOJ & FinCEN, Ripple agreed to register sales of #XRP ONLY through FinCEN. The agreement forces Ripple to comply with the Banking Laws of the United States – not securities laws. 👇 pic.twitter.com/1rg0KbKfCc
— John E Deaton (@JohnEDeaton1) March 7, 2022
Read Also: Empower Oversight in Possession of Vital Documents That Could Determine Outcome of Ripple-Sec Case
Fifth Point: He said in 2018, SEC lawyers analyzed the possibility of XRP being a security. But there was no conclusion that XRP was a security as no enforcement was recommended.
“On June 13, 2018, SEC lawyers write a legal memo analyzing w/r XRP is a security and it DOES NOT recommend enforcement. It’s clear the SEC’s own analysis did not conclude #XRP was a security. One, the SEC would turn the memo over. Two, they would’ve informed Ripple.”
Sixth Point: According to Deaton, Hinman’s speech of 14th June 2018 was treated as market guidance, captioning a clip of the SEC meeting that had Attorneys Nancy Wojtas and Wendy Moore in attendance.
In the course of the meeting, Wojtas said if your platform is slightly more decentralized than Ethereum (ETH), you’re free.
Deaton wrote, “In the clip above, Wojtas said “if you can do just a little bit better than ETH you’re golden.” Perkins Coie lawyers helped write the Hinman Speech and Wendy Moore, a lawyer from that firm, responded to Wojtas’ comment with: “Then why isn’t Ripple?” (Huge evidence).”
In the clip above 👆 Wojtas said “if you can do just a little bit better than #ETH you’re golden.”
Perkins Coie lawyers helped write ✍️ the Hinman Speech and Wendy Moore, a lawyer from that firm, responded to Wojtas’ comment with:
“Then why isn’t Ripple?”
(Huge evidence)
— John E Deaton (@JohnEDeaton1) March 7, 2022
Seventh Point: In August 2018, Ripple CEO Brad Garlinghouse and CTO David Schwartz approached Jay Clayton (Former SEC Chairman who masterminded the filing of the lawsuit) and Hinman to discuss the digital token XRP since only Bitcoin and Ethereum were viewed as decentralized assets in the speech. They met with them to demand regulatory clarity for XRP.
“Because Hinman only blessed BTC & ETH in his speech, on August 20, 2018, Brad Garlinghouse and David Schwartz met with Clayton and Hinman to discuss XRP. Brad informed them: “Ripple is living in purgatory” over XRP’s lack of clarity.”
Eighth Point: CryptoLaw founder tweeted, “The next month, September 2018, Garlinghouse met with Commissioner Elad Roisman. During this meeting, not only did Roisman NOT inform Brad that the SEC considered XRP a security, Roisman made statements that gave Garlinghouse confidence that XRP WASN’T viewed as a security.
“Roisman’s lawyer (Estabrook) took notes during this meeting. Claiming privilege, the SEC refuses to turn over these notes. It should be noted, however, the SEC provided notes of other meetings between Garlinghouse and the SEC. The notes clearly corroborate Brad’s testimony.”
Ninth Point: “The January 2019 Coinbase meeting w/ the SEC. Coinbase and its sophisticated securities lawyers informed the SEC they determined today’s XRP not to be a security and intended to list it unless the SEC disagreed. The SEC did not and XRP was listed on Coinbase in February 2019.”
Tenth Point: John Deaton said the SEC knew about transactions between Ripple and MoneyGram, but now claims that all the sales are investment contracts:
“In June 2019 the SEC allowed Ripple to acquire a 9% stake of MoneyGram. Ripple filed a notice w/ the SEC informing it about it’s intended use of XRP and MG. In short, the SEC knew Ripple would transfer XRP to MG, who would then sell it to retail holders via exchanges.
“The SEC now claims the XRP sold by MG to retail holders via exchanges are also sales of unregistered securities. (A totally absurd argument).”
Eleventh Point: “On December 4, 2019 the Financial Stability Oversight Council’s 2019 Annual Report is issued, which classifies XRP a: “currency.” Clayton, as Chairman of the SEC, voted to approve the report and signed it.”
Twelfth Point: “In January 2020 & 2021 (after the lawsuit was filed), Bailard Inc., a money manager business and perfect example of what a market participant believed, filed an ethics disclosure w/ the SEC.
“Bailard assured the SEC it would only trade the cryptos generally accepted by the market and by the SEC as: “currencies not subject to regulation by the SEC.” The generally accepted currencies not regulated by the SEC are: BTC, ETH, and XRP.”
Bailard assured the SEC it would only trade the cryptos generally accepted by the market and by the SEC as:
“currencies not subject to regulation by the SEC.”
The generally accepted currencies not regulated by the SEC are:#BTC, #ETH, and #XRP.
👇👇 pic.twitter.com/4iPINWIvRA— John E Deaton (@JohnEDeaton1) March 7, 2022
Read Also: Ripple CEO Highlights Reality of XRP, Crypto, and Blockchain’s Role in Evading Global Sanctions
Thirteenth Point: CryptoLaw founder said the SEC allowed Ripple co-founder Jed McCaleb to continue the sale of XRP since the start of the lawsuit without issuing a cease and desist against him:
“The SEC claims all ongoing sales of XRP are securities BUT didn’t issue a cease and desist against Co-founder McCaleb who has made over $2.6B in XRP sales SINCE THE LAWSUIT WAS FILED. McCaleb has made $1B more than the SEC seeks against Ripple!”
Fourteenth Point: “Despite the absurd claim each and every sale of XRP is illegal, the SEC failed to seek a preliminary injunction. If the SEC truly believed today’s XRP is a security, would it allow Ripple to engage in ongoing sales of unregistered securities to help pay Ripple’s defense?”
Last Point: “Brad Garlinghouse & Ripple executives like Stuart Alderoty & David Schwartz met with leaders of the SEC including the Chairman, Director of Corporation Finance, Commissioners, and others, multiple times & was NEVER informed XRP was a security except for a meeting just prior to the lawsuit.”
In conclusion, John Deaton said with the highlighted facts, he believes the SEC will lose the case, adding that there are tons of other evidence, such as Chris Giancarlo’s op-ed concluding XRP IS NOT a security.
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