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Larry Cermak @lawmaster
, 16 tweets, 5 min read Read on Twitter
1/ This week I decided to look at Ripple and whether XRP could qualify as a security based on what Ripple executives have said publicly in the past.…
2/ SEC Chairman Jay Clayton said at Consensus Invest in late November that tokens that are ‘sufficiently decentralized’ are no longer securities. That means:

• not one person or group of people control its supply or control trading
• access to asymmetric information
3/ According to SEC’s Hinman, one question to ask to determine whether a token is a security is: “Has the promoter raised an amount of funds in excess of what may be needed to establish a functional network?”
4/ Ripple Labs is and will continue to be a regular seller of XRP, while according to Ripple management, the XRP Ledger is already a functional and decentralized network (this statement has been highly contested by industry experts as well).

5/ The revenue from selling XRP is used to increase the value of Ripple. Ripple’s CTO: “The higher the price of XRP, the more money Ripple makes by selling XRP, the more money Ripple is worth, the more power Ripple has to incentivize partners, and so on.”…
6/ In 2013, the source of revenue was said to be the sale of XRP. David Schwartz responded in 2013: “We promote and develop Ripple into a massive and successful open source, decentralized payment system. Our source of revenue is the sale of XRP.”…
7/ Chris Larsen, co-founder and former CEO of Ripple, said in 2013:

8/ David Schwartz, Ripple's CTO, said:…
9/ “Therefore as the protocol grows, since there’s a limited amount of XRP, the value of XRP should go up, because it’s in demand by market makers,” said Chris Larsen in an interview in 2014.…
10/ The most damning claim that I found is this:

“After all, the reason we’re doing this is to increase demand for XRP to increase the value we can extract from our stash of XRP” said Schwartz in 2017.…
11/ Ripple committed to placing 55 billion XRP in an escrow account to establish 55 contracts of 1 billion XRP each that will expire on the first day of every month from months 0 to 54. As each contract expires, the XRP becomes available for Ripple’s use.
12/ If Ripple wants to maximize their revenues from selling the XRP that it has available, it’s in their best interest to try to increase the price of XRP. Ripple has sold over $617M XRP in the public markets and to institutions
13/ It’s nearly impossible to make the argument that XRP is
‘sufficiently decentralized’

It is clear from their own statements and actions that:

• Ripple controls the supply and trading
• Ripple has access to asymmetric information
14/ XRP was created as an anti-sybil mechanism for the Ripple protocol with the intention to continuously sell XRP to generate revenues. As demonstrated by their own comments, Ripple is clearly incentivized to increase the value of XRP and therefore XRP holders’ investments.
15/ The long controversy will likely be decided in federal court down the line. In any case, Ripple’s attorneys will have their hands full in explaining the historical and recent statements of Ripple executives with respect to XRP and Ripple’s relationship to the cryptocurrency
Is this the best critique the XRP supporters can come up with? WEAK 🧠🌊…
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