Thread by @JohnEDeaton1

UNDISPUTED FACTS TIMELINE ADDITIONS

2012: Perkins Coie (the same law firm that helped write ✍️ Hinman’s #Ether Free Pass Speech) informed @chrislarsensf #RippleCredits (aka #XRP) IS NOT a security;

The 2012 memo warned Larsen there was a risk under the Bank Secrecy Act (BSA);

https://twitter.com/bgarlinghouse/status/1494843855899815938

The 2012 legal memo 📝 stated that the law firm’s “analysis has never been tested by FinCEN in practice, and therefore reliance thereon is not without risk”;

The Perkins Coie 📝 was spot on b/c in:

2015: FinCEN sued @Ripple claiming it had violated the BSA;

FinCEN’s suit against Ripple was the first civil enforcement action against a cryptocurrency industry player - a case of true first impression in the industry;

Ripple settled paying 700K and agreed to comply w/ NON- SECURITIES regulations;

Ripple was classified as a Money Service Business (MSB) and pursuant to the binding federal agreement, Ripple stipulated:

“Any sale or transmission of XRP by Ripple Labs or any of its subsidiaries shall be conducted ONLY through an entity registered with FinCEN”;

In 2015, pursuant to this binding agreement w/ the U.S. Federal Government, #XRP was declared to be “convertible virtual currency”;

On June 13, 2018, SEC enforcement lawyers wrote a legal memorandum 📝 analyzing whether #XRP was a security under the Howey test;

After conducting this in-depth legal analysis of #XRP, the SEC enforcement staff DID NOT recommend filing an enforcement action against Ripple;

The next day, on June 14, 2018, Bill Hinman delivered the #Ether Free Pass Speech that Lowell Ness of Perkins Coie helped write ✍️;

Two months after the June 13, 2018 #XRP memo and #Ether Free Pass Speech, on August 20, 2018, @bgarlinghouse and @JoelKatz met with Hinman and Clayton;

At this meeting Brad Garlinghouse loudly spoke out:

“Ripple is living in purgatory over the lack of clarity with #XRP”;

After Garlinghouse spoke out about the lack of clarity regarding #XRP, neither Clayton nor Hinman provided any clarity by claiming the SEC considered #XRP a security;

2 months after the #XRP Memo 📝 & #Ether free pass and face to face w/ Clayton and Hinman - they said nothing;

After the FinCEN fine and settlement, and for FIVE and 1/2 more years, #XRP was openly and publicly traded on over 200 exchanges worldwide including in the United States 🇺🇸;

Also, the SEC allowed its employees to trade or own crypto assets - including #XRP - without any restrictions similar to the ones in place related to owning securities;

In fact, up until 2019, even SEC enforcement lawyers could own #XRP without seeking permission or advice;

Also, in 2019, the United States’ largest exchange, @coinbase, went to the SEC in January 2019 informing the SEC that Coinbase had run #XRP through its stringent regulatory framework and determined #XRP NOT a security and intended to list #XRP - unless instructed otherwise;

The SEC did not disagree and on February 28, 2019, Coinbase listed #XRP;

18 months later, on Dec. 17, 2020, former SEC Chief Grundfest sent Clayton, @HesterPeirce, Elad Roisman, @SECHerrenLee, Commissioner Crenshaw & others a letter pleading not to sue Ripple over use of #XRP;

Grundfest explained that everyone behind the decision to bring a suit against Ripple and #XRP was leaving the SEC;

Hinman left a week earlier; Clayton was leaving on Dec. 23, 2020; Marc Berger, Director of Enforcement and someone who helped write ✍️ the Complaint was leaving;

The Director of Trading and Markets was also leaving within weeks;

Grundfest characterized these departures as a mass exodus never before seen of senior staff responsible for bringing a lawsuit as they walked out the SEC’s door🚪 and that this exodus raised obvious concerns;

Grundfest explained that there was absolutely no exigent reason to rush the lawsuit considering #XRP had been traded for almost 8 years;

Grundfest pointed out that after a 2 1/2 year investigation, the SEC did not allege a single instance of fraud or misrepresentation;

Grundfest stated if the SEC filed suit it would cause multi-billions in damages to innocent holders of #XRP with no connection to Ripple and that this harm to innocent holders would be the most significant in the history of the SEC in a non-fraud case;

Grundfest stated the SEC should not bring an action against #XRP and leave #ETH untouched b/c the SEC could not make a material distinction between #ETH and #XRP;

Grundfest was the perfect person to acknowledge the similarity between #XRP and #ETH b/c he had acted as an adviser to the #Ethereum founders - he served as a liaison between #Ethereum and the SEC before and after the #Ether ICO;

Grundfest, himself, stated that if the SEC brought an enforcement action under these circumstances, it would raise serious concerns about the Commission’s exercise of discretion - Grundfest questioned whether there was improper motive behind the suit;

On December 21, 2020, Clayton met with @GaryGensler, suspected to be appointed by Biden as the next SEC Chairman;

The next day, on Dec. 22, 2020, despite the warnings and concerns of Grundfest, via reporting by @CGasparino & @EleanorTerrett, Clayton voted against his fellow Republicans (Peirce & Roisman) and w/ democrats (Herren Lee & Crenshaw) in a 3-2 vote to file the case.

The next day, Clayton left the SEC forever. His firm, Sullivan & Cromwell, represented @ConsenSys & @ethereumJoseph in its purchase of Quorum and the #JPMCoin - a direct competitor of Ripple and #XRP. Clayton also went to One River after its $1B bet on #BTC and #ETH.

After collecting $15M in “retirement” benefits while at the SEC from Simpson Thacher, a member of the EEA, Hinman “un-retired” and went back to Simpson Thacher. Hinman brought with him Enforcement Director Marc Berger who also became a partner at Simpson Thacher.

Oh, I almost forgot:

Hinman also became a partner at @a16z with the same people that helped write the #Ether Free Pass speech.

But he must’ve forgotten those #Ethereum folks b/c he met with them 6-8 times btwn Dec. 2017 & June 2018, but stated repeatedly that when he looks at #Ethereum he doesn’t see a third-party promoter pushing for the adoption of #Ethereum. Yea, he’s probably never heard of Web3.

Now read the fact timeline👇as well and I challenge anyone to try and defend the SEC’s conduct b/c you can’t. Some of you may still believe Ripple violated securities laws but no rational person can argue #XRP itself is a security per se or that the SEC has acted in good faith.

https://twitter.com/JohnEDeaton1/status/1447400529534066692

And as for the Billy Hinman Speech, the SEC’s recent 180 calling it market guidance may have saved him from a Title 5 violation. 👇

https://twitter.com/johnedeaton1/status/1471572405948751873