Thread by @JohnEDeaton1

I said from the first day this case was filed that it was a major mistake for the SEC to sue @bgarlinghouse and @chrislarsensf individually, in a non-fraud case, alleging aiding and abetting. It placed a higher burden for the SEC to meet.

https://twitter.com/metalawman/status/1633515233879760905

The SEC must show that the 2 executives were reckless from 2013 in not knowing #XRP was a security. The SEC must prove they were reckless in not knowing XRP was a security in 2013 despite the fact SEC enforcement lawyers were allowed to own and trade XRP until 2019 (6 yrs later).

Compare that reckless burden - going back to 2013 - with the fact that in October 2020 - 2 months before the lawsuit - the SEC stated to the public that no determination had been made regarding whether #XRP was a security and it may NEVER make such a determination.

Compare that on June 13, 2018 SEC Enforcement Lawyers wrote a detailed memo 📝 analyzing whether #XRP was a security under Howey and the report did NOT recommend an enforcement action or a cease and desist letter to stop selling #XRP.

Now consider in 2014 (6 years before the lawsuit), the @USGAO classified XRP a “virtual currency being utilized in a decentralized payments system”, AND in 2015, #FinCEN declared #XRP a “convertible virtual currency” forcing compliance with Banking Laws not securities laws.

Yet, the SEC thinks it can prove that these two executives were RECKLESS in not knowing XRP was a security when the SEC itself couldn’t figure it out?

So of course the judge is going to allow expert testimony that XRP is treated as a non-security. It goes to the reckless issue.

If it’s a non-fraud case you don’t need the executives so why would you make your job harder as a prosecutor?

The decision to go after the individual executives was personal in nature, or strategic because they wanted to try and use it as leverage for a settlement.

IMO, It was also done to lessen support for Ripple within the industry. The SEC could argue Brad said he was long #XRP but was also selling #XRP. It is a pure Divide & Conquer strategy. And let’s be honest: it worked. People won’t worry about the SEC’s bogus underlying claims.

It was a major mistake by Hinman, Clayton and @SECEnfDirector Marc Berger - as they were all walking out the🚪

Go back to Judge Netburn’s decision forcing the SEC to turn over the Hinman emails and speech drafts. She cites this reckless issue. In sum, the SEC loses this count.