Thread by @JohnEDeaton1

Months ago I tweeted that the most important decision a prosecutor makes is at the beginning of a case when he decides what charges to file.

I predicted that the decision to charge @bgarlinghouse and @chrislarsensf with aiding and abetting would come back to haunt the @SEC_News.

https://twitter.com/FilanLaw/status/1404526418751590409

The SEC charged the two executives with reckless conduct for the entirety of their tenures working at @Ripple.

What that means is that the SEC must prove that Brad and Chris actually believed #XRP was a security or it was reckless for them not to realize #XRP was a security.

https://twitter.com/johnedeaton1/status/1377451077860200451

When determining recklessness the court looks to what an objective person would believe under the circumstances.

What Ripple is arguing here is that if at any point during the last 8 years the SEC failed to classify #XRP as a security in connection with their own policies,

then surely Garlinghouse and Larsen could not have been reckless in believing that XRP was not a security.

Ironically, 11 months before the lawsuit, the investment company Bailard (see 👇) informed the SEC that it would allow its employees and affiliates to ONLY trade the three

https://twitter.com/mrfreshtime/status/1381641649340755970

cryptocurrencies NOT considered securities by the SEC: #BTC, #ETH and #XRP.

What if one or more of the SEC Commissioners or enforcement lawyers actually owned #XRP? Or imagine if one or more of them offered an opinion that #XRP could never be considered an investment contract

and thus a security under the Howey Test. Game over!

In the clip contained within my previous thread above (thank you @MrFreshTime), Clayton arrogantly stated that he preferred to go after the executives because it created a different dynamic in the case. In the video,

Grundfest stated that it makes the case harder to prove because it requires evidence regarding intent or the state of mind of the executives (as opposed to just a strict liability case). But Clayton responded to Grundfest’s point by saying it might be worth the trouble.

For the record, I’m not being bias or unfair to the SEC. These are the facts.

As a former federal prosecutor, if after a 2 1/2 year investigation, spanning an 8 year period of time, the government can’t find any evidence of fraud or misrepresentation, then you generally don’t

charge the individual executives.

So, why did the SEC & Clayton choose to do so? Was it to try and allow the government to subpoena all the personal financial records and use it as leverage to force settlement? Was it to interfere with business relations providing more leverage

for settlement? I believe #XRPHolders should rejoice in the fact that Clayton did what he said he preferred to do: charge the executives as they did (no offense to Brad and Chris). Without the higher burden of proof, I’m not sure the Court orders the #BTC and #ETH documents be

produced. There is also a good chance the Court wouldn’t allow any discovery related to the SEC’s internal views on #XRP either.

It’s possible that the Court would have allowed all this discovery anyway, based only on the Fair Notice Defense alone. But by charging aiding and

abetting, Clayton and crew guaranteed it’s relevance.

#XRPHolders would have preferred the SEC not claim #XRP itself is a security and only go after Ripple for specific distributions in early years.

Whether the decision to charge was because of bad motive or bad lawyering, 🙏.