Thread by @JohnEDeaton1

Many people, like Ian, believe @Ripple violated securities laws and should be sued by the SEC accordingly. Some believe that just b/c #Ether investors violated the law doesn’t excuse Ripple from it’s wrongdoing. Regardless of whether you agree, this is not an unreasonable stance.

https://twitter.com/ian_fisch/status/1482897031714775040

What is unreasonable is the SEC abandoning all truth and law and arguing absurdly:

“the very nature of XRP in the market”

&

“the nature of XRP itself”

make all #XRP securities. Note the quotations. This language is directly from the Complaint filed against Ripple and #XRP.👇

Some people don’t know or refuse to accept that the @SECGov could’ve easily sued @Ripple @bgarlinghouse and @chrislarsensf to enforce securities laws w/o devastating #XRPHolders and making a complete mockery of 76 years of legal precedent while destroying the SEC’s credibility.

All the SEC had to do was charge Ripple and it’s executives in the same manner it had done previously in similar cases. Actually, considering no fraud has been alleged, had the SEC treated this case similar to other cases, the two executives wouldn’t have been charged.

It is very uncommon to charge individual executives in non-fraud cases. Regardless, the SEC usually alleges that a specific offer and sale on a specific date constituted an unregistered securities offering.

Instead, the SEC claims #XRP itself is an unregistered security - ALL XRP!

The SEC argues:

“The XRP traded, even in the secondary market, is the embodiment of those facts, circumstances, promises, and expectations, and today represents that investment contract.” 👇

In March 2021, Judge Netburn recognized this overreaching assertion. She advised the SEC under it’s theory every single person in the world 🌎 that sells XRP is violating the law. The Judge herself recognized that the SEC’s claims implicated the global retail holders of XRP. 👇

Do you see how over broad and outrageous the SEC’s argument is? Howey and the cases that followed - including digital asset cases - have all found the way the asset is offered and sold (the scheme) is what makes it a security - not the underlying asset itself.

“The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.”

- Howey case

The SEC has not only ignored the 1946 Howey case, but also the 2019 Telegram case. In Telegram the Court ruled:

“the ‘security’ was neither the Gram Purchase Agreement NOR THE GRAM but the entire scheme that comprised the Gram Purchase Agreements …”

(I added the caps).

The SEC isn’t just ignoring 76 years of caselaw but is also making allegations that directly contradict statements by the people who filed the case. Read Bill Hinman’s speech. In the speech declaring #BTC & #Ether non-securities he made it clear the token itself isn’t the issue.

“Returning to the ICOs I am seeing, strictly speaking, the token – or coin or whatever the digital information packet is called – all by itself is not a security, just as the orange groves in Howey were not.”

- Bill Hinman, June 14, 2018.

Hinman continued:

“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers.”

Jay Clayton agreed with Hinman’s conclusion that the token itself is NOT the security.

“I agree that the analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inhere to the instrument.”

-Jay Clayton letter to Congressman @RepTedBudd

@HesterPeirce interviewed by @ThinkingCrypto1 stated she dissuades her colleagues at the SEC from looking at the token itself as the security because after all the oranges 🍊 were never considered securities in Howey.

I have previously argued that every Altcoin arguably starts out as a security. I believe the SEC can make a case (assuming it can establish jurisdiction by proving sales within the U.S.) that sometime between 2013 to 2017 #XRP was a security.

Its certainly not a slam dunk case against Ripple during the early years, but it’s a case the SEC could win. The case against Ripple, however, isn’t nearly as strong as the case against #Ethereum regarding Ether’s ICO. I’ve stated a 🐒 could prove that case. 👇

https://twitter.com/johnedeaton1/status/1455213397780402180

The point of this thread 🧵 is to show those who believe the SEC was justified in bringing a case against Ripple, the need to recognize that it could have done so without causing all of this madness. Recognizing the SEC’s approach and actions as wrong is not rooting for Ripple.

If the SEC had limited the charges only to include early sales of XRP by Ripple or it’s executives, I wouldn’t have filed suit against the SEC. But by claiming today’s #XRP itself, including #XRP traded in the secondary market, are all securities, the SEC abandoned its mission.

If the SEC truly believed today’s XRP itself is a security why didn’t it seek an injunction to prevent Ripple from ongoing sales? Ripple can literally sell XRP today to help pay for attorney fees it incurs in fighting the SEC in this case.

Although it didn’t allege fraud or misrepresentation, the SEC has made assertions the co-founders of Ripple have enriched themselves at the expense of retail holders. If the SEC truly believed those assertions why did it not issue a cease and desist letter to @JedMcCaleb?

The SEC seeks $1.3 Billion in disgorgement against Ripple and the two executives. Yet, since the filing of the lawsuit, McCaleb has sold over $2 Billion USD worth of #XRP. Jed had made a billion dollars more than the SEC seeks against the defendants - SINCE THE LAWSUIT WAS FILED.

If the SEC believes all XRP are securities then why does it allow all of these illegal sales? Why not seek a preliminary injunction to stop all sales like it did in Telegram?

The answer is clear: the SEC doesn’t believe in its own case theory. The lawsuit was used as a weapon.

I’m not suggesting Ripple or McCaleb shouldn’t be allowed to sell XRP or that they’re doing anything wrong. I don’t believe they are. I’m only pointing out how inconsistent and flawed the SEC’s position is. If it believed it’s own argument, it would’ve sought an injunction.

If this case was about enforcing securities laws or protecting investors they would’ve approached the case similar to cases of the past.

The point is you can believe Ripple should’ve been sued and recognize that this case represents much so more than w/r Ripple sold a security.