Thread by @JohnEDeaton1

In the SEC Complaint against Ripple, it alleges that Ripple continues to sell unregistered Securities in the form of XRP. Unlike, in the ICO cases of 2017, the SEC did not only focus on early distributions but made the ridiculous claim that XRP is a security today. Let’s review:

The controlling law on what constitutes a security was handed down in 1946 in the Supreme Court case of SEC v Howey. Howey has set the standard for over 74 years.
The underlying asset in Howey was orange groves. Thus, we must compare the orange Groves to the Digital Asset XRP.

Orange groves were plots of land that were sold to tourists. The investors purchased the lots of land, but also paid the seller money to manage the orange groves. The seller would plant the seeds, water the trees, harvest the oranges and sell the oranges to people and places.

The investors sat back, did nothing, and shared in the profits. The Supreme Court laid out a four-factor test that has become the Howey Test in
deciding whether an asset is a security. Those 4 factors are: 1) a person must invest money; 2) in a common enterprise;

3) the person is led to expect profits by the sponsor or company they bought the asset from; and 4) that profit arises from the sole efforts of other people than the investors.
The Supreme Court, in applying the four factors, concluded that the orange groves were securities.

They were securities because the investors did nothing. They never visited the land; never procured the trees; never took possession of the oranges; or did anything, except invest money and wait for
profits. After Howey, there have been a progeny of cases similar to Howey.

In all the cases applying The Howey 4 Factor Test none of the assets can obviously be compared to Digital Assets like XRP or ETH or BTC. Some of the other highlighted assets in famous cases included oil drilling rigs, whiskey barrels, pay phones, and beavers.

In all of those situations, the assets were deemed a security.
ALL FOUR FACTORS MUST BE MET in order to be deemed a security. In all of these cases the asset (orange grove, pay phones, whiskey barrels, beavers) was purchased directly from the Seller / Sponsor.

HOW MANY XRP HOLDERS BOUGHT DIRECTLY FROM RIPPLE? None of us! In the above cases the investor NEVER took possession of the assets and the Seller / Sponsor had complete control over the oranges, whiskey and beavers. HOW MANY OF YOU allow Ripple to control your XRP? None of us!

In the cases that the courts deem the Asset a security the investors NEVER took possession of the assets and was never in control of the assets. The investors didn’t take any of the 🍊 or the 🥃 or the pay ☎️s or beavers and sell them themselves. We own and control our XRP.

This fact alone makes XRP not a security. Not only does Ripple not maintain our XRP, many of us don’t even let exchanges hold our XRP. We can gift our XRP, we can hold our XRP and we can sell our XRP. We can even convert our XRP to BTC, ETH, ALGO, XLM, etc.

If the investors in Howey would have taken possession of the oranges and sold them themselves (or ate them), it would not have been a security. One thing is for sure, even if the Howey investor would have taken the 🍊 , they wouldn’t be able to CONVERT them to 🍎s.

I will do something that the SEC DID NOT do in its Complaint against Ripple - apply the 4 factor test. 1) did we invest money - yes (xrp meets this factor but so does every single investment (stocks, bonds, real estate);

2) did Ripple lead us to believe that we would make a profit from our XRP - no, we didn’t buy from Ripple and we never talked to them about our purchases; in fact, we all knew it was possible that we would not make a profit as crypto is still early in its development;

3) are we engaged in a common enterprise with Ripple - no, we didn’t buy from Ripple and we all use different exchanges around the world - 200 exchanges are in fact competitors to each other - the very opposite of common enterprise;

4) did profits from our XRP, arise solely from the efforts of others - no - some of us can use our XRP as collateral to acquire loans in fiat money or crypto; we can gain interest on our XRP and generate yield that we can’t get with fiat money.

THUS applying the 4 factors of Howey makes this a clear case. The SEC MUST prove ALL 4 Factors. They can only prove 1 (the same one that could prove in anything you buy (stock, poke-man cards, art). I know it sucks to watch your money get cut by 60-75 percent. But we WILL WIN!

In the coming days I will tweet other things that I intend to PROVE in Court against the SEC. I know these are long tweets but I hope it helps provide a little clam. We got this.