The SEC’s view of XRP is incredibly negative and reactionary. It either fails or refuses to understand XRP or is belligerently and deliberately acting to stymie Ripple’s attempt to build a use case for on demand liquidity because some interest wants this use held up. /1 I start with the statement in a recent SEC court document in the Ripple case, that was well received by the XRP community, that the SEC is not seeking appellate review of the Court’s finding that the underlying asset, XRP, is not itself a security. /2

The more I read the Torres decision the more I struggle to see the error. The source of the error cannot be the different treatment of the 3 categories of sales. As Torres J. noted it was the SEC who categorised these three types of sales./1 The judge referred to the SEC’s Reply at pages 4-5 in which it alleges Ripple engaged in three categories of XRP sales and offers /2

Thanks Sherrie. Great point. Just like Hinman said that leaving the Ethereum ICO aside the current position of #Ethereum (as at June 2018) was that it was not a security, /1

https://twitter.com/cherryempress21/status/1667698871290454016

so too can one say that leaving the ICO of #Cardano to one side how are current day sales of #ADA on @coinbase exchange a security . How long has the Cardano blockchain been functional. /2

Why does the SEC thinks that #ADA is a security.
Imagine you create a product and then you add some feature or capability that makes it better. This happened a lot in the history of smart phones. You announce this improvement and how it will increase demand for your product/1 Then you post on a blog a description of your efforts to add more functionality and features to your product. You may be a software developer improving a software application. Nothing more, you just share that information on your blog./2

The SEC wants to be able to say that all XRP in the market are or represent Ripple’s investment contracts (meaning all XRP Ripple has offered/sold/distributed). Problem is the uncomfortable truth about what the SEC calls the ‘small subset’ of sales to ODL customers/1 They just don’t seem to fit any part of the Howey test. No investment. Even the SEC alleges they are dealt with by ODL customers immediately. No expectation of profit because they are being used as a bridge, not held. No common enterprise. ODL users are customers of a product/2

To put this and Stuart’s tweet in context the starting point is to recognize that the SEC is trying to massively stretch the Howey test to cover crypto on the grounds the test was intended by the Court to be flexible/1

https://twitter.com/s_alderoty/status/1657452465938202626

The SEC does this in relation to crypto by an expansive view of common enterprise that allows it to avoid the word ‘enterprise’ and the need to link it to specific transactions and focusing insteadon the adjective ‘common’ /2

I don’t accept the relevance of the LBC burning issue to XRP at all. Nothing about LBRY’s sales of LBC are even close in nature to Ripple’s current sales of XRP to ODL customers. /1

https://twitter.com/HODLmaxi/status/1657187407714820096

If Judge Torres finds that Ripple’s past sales of XRP were investment contracts but does not find XRP itself is a security why does it follow that Ripple would be ordered not to sell XRP to ODL customers. It doesn’t follow. Such sales are not investment contracts /2

The preliminary statement in Ripple’s Reply in its summary judgment motion states upfront that the case turns on statutory interpretation of the term investment contract. /1 It refers to the SEC’s case theory that if someone buys an asset hoping to make money and its interests and the sellers even partly align it is a security subject to registration which Ripple says is not the law, /2

What is the relevance of the blue sky issue in the fair notice defense. I was thinking it was only relevant to the Howey analysis and didn’t notice until now it’s role in the fair notice defense. /1 But Ripple’s opposition to the SEC’s motion for summary judgment on the fair notice defense clearly argues that Ripple sales involve no contracts and lack the essential ingredients that define the term investment contract. /2

You know I’m obsessively going to the common enterprise prong to see what the parties say. Firstly for Ripple, the first point it makes, apparent already from reading the SEC’s Amended Complaint, is the SEC refuses to say what the common enterprise is. What are its boundaries/1 It relies on broad vertical commonality rejected in the second circuit. Secondly, it cannot prove pooling required under the Revak decision /2

Thanks James. It must be discouraging for LBC holders that #LBRY is in a weakened financial position because of the costs of years of investigation and litigation and a legally weakened because of what I regard as a poorly reasoned judgment, and on top of that /1

https://twitter.com/FilanLaw/status/1598064971627532288

taking the motion at face value, LBRY makes a settlement proposal consistent with a framework laid out by the Judge at the recent Status Conference, which the SEC does not accept and is obviously playing hard ball. How does this help retail investors in LBC /2

These comments by Judge Glenn in the Celsius matter should be brought to Judge Torres’ attention. The Judge is right to point out that cryptocurrency cases in the US may raise issues for which there is no controlling authority and the excellent paper of the UK Law Commission/1 may be persuasive in dealing with such issues. This is a passage from the same Law Commission paper the judge referred to which amply shows why cryptos such as #Ethereum #XRP and #Bitcoin are not securities /2

I have now had a chance to properly consider the SEC's reply to Ripple arguments on the need for certain 'essential ingredients', including a contract, for there to be an 'investment contract. The SEC goes to some lengths to mischaraterize Ripple's attempt to construe /1

https://twitter.com/JayVTheGreat/status/1583969720797011969

a non-defined statutory term 'investment contract' by reference to pre-1933 blue sky law cases, as its Ripple's own 'manufactured test'. There is a lot of rhetoric using words such as 'extremist argument', 'radical proposition', 'far-fetched theories', 'reactionary argument'./2

Here are some preliminary points. I will start by making the point that the legislature (Congress) makes laws and courts interpret and apply laws. The starting point is the 1933 Securities Act. The Act creates the concept of an investment contract not the Howey case. /1

https://twitter.com/JayVTheGreat/status/1583608917363286016

Congress understood the terminvestment contract in a contemporary context of securities law in 1933, over a decade before the Court in the Howey case interpreted and applied the term to a specific factual context (in which there were written contracts with the investors) /2

Thanks James. Early for once. The imprecise use of language in respect of common enterprise is just what the SEC should not be allowed to do. The enterprise is not defined and then used interchangeably with ecosystem as if ODL and the XRPL are identical. The SEC conflates /1

https://twitter.com/filanlaw/status/1571277097322090496

different things all the time. The XRPL if that is what the SEC thinks is an ecosystem can exist independently of anything centred on Ripple that can reasonably called an enterprise /2 @JohnEDeaton1 @s_alderoty @attorneyjeremy1 @freddyriz @AshleyPROSPER1

I have seen a lot of comments about the Chamber’s Amicus brief not helping Ripple but being good for XRP holders. To a point this may be correct. The Chamber wants the court to differentiate between the transaction involving a digital asset which may be an investment contract /1 and an asset itself which the Chamber wants the court to see at least from some point in its life as a commodity. The Chamber wants the court to realise that whether a transaction involving a digital asset is a security & whether the asset itself is a security are seperate /2

Ok. It is consistent but broader. Attorney Tenteiro focused on efforts to improve utility or increase adoption of XRP which can fall within terms in the Framework document such as development, improvement or enhancement. But here is where I have a problem with the Framework, /1

https://twitter.com/kashta9/status/1554671662796120065

the Hinman speech and the SEC’s Amended Complaint against Ripple. There is very loose use of terms such as network (in the extract you provided), system, project etc. it leads to inconsistency and unclear thinking and argumentation/2

For the entire Ripple case I've wondered how the SEC distinguishes XRP from Ethereum if it truly believes that XRP is a security but Ethereum isn't. Reviewing the transcript of the hearing way back on 19 March 2021 I found a comment made by attorney Tenreiro that gives a clue./1 and it relates to the reasonable efforts of others prong of Howey. In the attached extract from the transcript there is a reference by Tenreiro to "Howey efforts". In the content of preceding passages from the transcript, this refers to efforts by Ripple, Brad and Chris /2

This is just the beginning. Ripple was sued and XRP was delisted by most US exchanges. #AMP was merely called a security by the SEC in the SEC v Wahi case and not sued itself and has had a delisting. The SEC strategy is successfully unfolding aided by /1

https://twitter.com/WatcherGuru/status/1554151808423059456

tribalism and maximalism by crypto projects and communities rather than a unified approach who can’t see the SEC’s overall strategy of controlling secondary markets by controlling exchanges and/or by having a court extend the Howey test to cryptos per se even when traded in /2

The emphasis stems from the Judge finding them relevant to the fair notice defense and ordering their production and the SEC refusing to disclose them. Parties never fight to withhold documents because they disagree with a judge on relevance only and certainly not to this extent.

https://twitter.com/ElderReb/status/1553931032713654272

The judge has reviewed 20 of them and has given no indication they are not relevant. The question is whether the documents, being relevant, are better for Ripple or the SEC? Do you think the SEC would bitterly oppose production for 18 months if they were better for the SEC /2

Thanks James. Deaton’s tactically brilliant move. Doing what Ripple can’t do and bringing the issue of conflicts of interests around the Hinman speech before judge Torres just before she has to deal with the SEC’s objection to the judge Netburn ‘s decisions in the context of /1

https://twitter.com/FilanLaw/status/1551619656632369152

retaliation against him for being involved in drawing public attention to the conflicts to the level of Congress. Giving the judge a reason to consider why the SEC has resisted their disclosure. Great tactical litigation work in action./2