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SEC charges Ripple and two executives
- geraldbauer 6y agoFYI: I collect a best of crypto quotes over at open blockchains, see https://github.com/openblockchains/crypto-quotes https://github.com/openblockchains/crypto-quotes To quote Nouriel Roubini, Economist: No use ever, past, present and future for XRP and Ripple products... it is already flopping after spending a fortune and printing a huge amount of totally useless XRP. (Now the XRP army of Twitter trolls, bots, hired guns and zealots will attack again...)
- vrperson 6y agoOK, but you can find such quotes for everything. "We estimate the global demand to be about 3 computers" "nobody will need more than 16KB of memory" and so on. (I'm not a fan of XRP, anyways)
- silentsea90 6y agoafaik, Nouriel Roubini is a permabear. If your mental ML model predicts downfall all the time, you'd be right some time. Roubini has been bearish on stocks and BTC for a while now, which implies bullishness on USD, something I fail to understand given the rampant printing.
- companyhen 6y agoAs much as a permabear he is, you can notice he's starting to change his tone on BTC overall as of late.
- silentsea90 6y agoMust have missed it. Can you share a link?
- swyx 6y agoa broken clock is right twice a day, in his case he is right about once a decade.
- gt565k 6y agoUS govt getting hungry for tax revenue. Expect more actions like this being taken in 2021.
- drchopchop 6y agoOr they're just, you know, prosecuting crime, which is their job.
- jchallis 6y agoSEC is pretty far from the tax collecting end of the house. Whatever their sins, greed for tax revenue is not a fair one.
- karmasimida 6y agoAnd? Go fight them in court if you thought you would win, the crypto folks should have enough money for now.
- marcinzm 6y agoTaxes are part of the social contract for living in the US. If you don't like it then you can try finding a different country to live in. But don't act surprised when trying to skirt around the contract gets you in trouble.
- ur-whale 6y agoWhat contract? I don't remember signing anything. Do you?
- makoz 6y agoI didn't realize we were suppose to sign social contracts, must've missed that memo.
- google234123 6y agoDid you sign anything agreeing to not murder?
- 6y ago
- HashBasher 6y agoPrice hasn't zero'd out. Says a lot about the sophistication of the holders.
- vmception 6y agoPartially First a securities designation and being forced to report financials doesn't completely destroy the transactional use case, so thats a big misconception in the crypto world. It would be incredibly inconvenient though and I doubt counterparties for the few Ripple products that are powered by XRP will ever want to hold and use XRP.
- aazaa 6y agoIronically, this could increase the exchange rate for XRP. Ripple controls a large block of uncirculated token that it sells. With this legal action, I suspect that supply will no longer be entering the market. Unlike Bitcoin, which issues new currency units through mining, XRP is issued by Ripple. The case against Ripple appears to revolve around this point: is the XRP token a security?
- spottybanana 6y agoXRP is a security, so is Ethereum, as both have been issued to collect initial funding. Bitcoin is not a security because it hasn't been issued to collect funding. To me the distinction is very clear and simple. However if I really needed money I still would probably issue an ICO and claim it is not a security because there is a big possibility that it will go unnoticed as SEC goes only after the bigger fish.
- agency 6y agoThe SEC disagrees re: Ether https://www.axios.com/sec-official-ether-is-not-a-security-928bd2ee-0891-4903-a12e-4457e617b4c7.html https://www.axios.com/sec-official-ether-is-not-a-security-9...
- polyomino 6y agoEthereum does not follow the SEC's definition of "decentralized": If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract. https://www.sec.gov/news/speech/speech-hinman-061418 https://www.sec.gov/news/speech/speech-hinman-061418 However, in Ethereum's case, it is designed to literally implode due to ice age if Vitalik doesn't intervene. The SEC was probably not cognizant of this fact when they made their statement. https://ethgasstation.info/blog/what-is-ethereums-ice-age/ https://ethgasstation.info/blog/what-is-ethereums-ice-age/
- 6y ago
- Causality1 6y agoXRP has the highest market cap? I think I've seen more places that take Dogecoin then take XRP.
- pluc 6y agoIt says third highest in the third sentence of article.
- qes 6y agoMarket cap doesn't mean much at all in crypto. XRP's is high because the circulating supply is 45 billion XRP - 2500 times more than BTC, 400 times more than ETH, etc. I could create a blockchain and issue a quintillion coins and if I manage to get it listed and sell some for a fraction of a penny it'll have a bigger market cap than the rest of crypto combined.
- cwkoss 6y agoAlso, 'circulating supply' is a misnomer for XRP. The vast majority is held by a small population of individuals who would crash the price if they tried to liquidate
- GoblinSlayer 6y agoNocoiners will blame technology for this.
- pluc 6y agoIt doesn't matter how good the technology is if it's controlled by scammers.
- risho 6y agowho cares what nocoiners think? bitcoin used to be considered a ponzi scheme for terrorists and criminals. short term sentiment doesn't really matter. in the long run the actual technology will speak for itself whether that be good or bad.
- davidwparker 6y agoRecent discussion: https://news.ycombinator.com/item?id=25502764 https://news.ycombinator.com/item?id=25502764
- geraldbauer 6y agoFYI: I collect a best of crypto quotes over at open blockchains, see https://github.com/openblockchains/crypto-quotes https://github.com/openblockchains/crypto-quotes To quote Nouriel Roubini, Economist: No use ever, past, present and future for XRP and Ripple products... it is already flopping after spending a fortune and printing a huge amount of totally useless XRP. (Now the XRP army of Twitter trolls, bots, hired guns and zealots will attack again...)
- bravura 6y agoI think the best quote was from Matt Levine in his "Money Stuff" Bloomberg column. I can't find it right now but it was essentially he was talking about paper key practices and said: "Imagine you go into a room of computer scientists and say: 'I've developed the most secure form of money possible, it's so secure you can't keep it on your computer and you have to dig a hole in your backyard and keep it there' you'd be laughed out of the room."
- salty_biscuits 6y agoUmm, this is sort of what Turing, arguably the father of computer science, actually did once (allegedly) https://www.reuters.com/article/us-markets-saft/saft-on-wealth-learning-from-turings-silver-hoard-idUSKCN0UY2OC https://www.reuters.com/article/us-markets-saft/saft-on-weal...
- lupire 6y agoEasier than digging a hole in my backyard for a $million in cash.
- chihuahua 6y agoThat's probably true. Cash becomes very unwieldy in large amounts. In part this is intentional to make it more difficult to carry $millions across borders undetected. It's not a coincidence that US$ in excess of $20 denomination is rare. In Europe, there's the E500 bill, which is a bit more practical for large amounts, and some have expressed a desire to withdraw it from circulation for this reason.
- risho 6y agogood. i'm amazed this didn't happen sooner. i have no idea how they can call eos and the dao a security offering and not xrp. xrp is one of the most obvious securities ever created.
- ogogmad 6y agoI've just read the Wikipedia page on Ripple. Can somebody explain in clear terms what the point of XRP is supposed to be? Is it supposed to be a faster Bitcoin? Is it supposed to be a less Chinese-controlled (supposedly) cryptocurrency than Bitcoin? Let's for the sake of discussion give them the benefit of the doubt.
- ur-whale 6y agoRipple is centralized. It's basically another PayPal.
- ogogmad 6y agoOK, but I'm asking why they need a cryptocurrency. Paypal certainly doesn't need one.
- eli 6y agoWhy does anyone start a cryptocurrency? To get rich, of course
- mtnGoat 6y agothis is probably the best answer OP is going to get. i doubt there was much logic applied, past the idea of getting rich, to the few thousand crypto currencies that were born in the last decade.
- vkou 6y agoBecause you can't collect dumb money from dumb people with the pitch of "I'm starting a competitor to PayPal, invest in me." But you can if you hint that if they buy your crypto tokens, those tokens will go to the moon.
- momothereal 6y agoMy understanding: Ripple is a company that aims to build a faster bank transfer protocol (faster than SWIFT, for example). To achieve that speed, banks transfer a digital currency (XRP) issued by Ripple instead of traditional currencies. It takes a few seconds for XRP transactions to settle, instead of days for traditional currencies via SWIFT. The value of this currency is decentralized, in the sense that people trade it with other currencies (which is also how Bitcoin, Ethereum etc. are valued). In the eyes of the SEC, the fact that XRP is directly issued by Ripple makes it similar to issuing shares. Even if Ripple doesn't control the value of the shares (XRP), they still manage the supply.
- shrimpx 6y agoCan someone clarify why XRP is considered a security by the SEC but bitcoin and ethereum are not? Is it something intrinsic in the tech, or is it just that XRP is "managed" by Ripple, a company, whereas BTC/ETH are not?
- __s 6y agohttps://news.ycombinator.com/item?id=25511198 https://news.ycombinator.com/item?id=25511198 > Unlike Bitcoin, which issues new currency units through mining, XRP is issued by Ripple Nobody can "print money" with bitcoin. That isn't the case with Ripple
- ur-whale 6y agoAlso: who would the SEC sue in the case of Bitcoin?
- xalava 6y agoThis has been clarified in prior statements: The SEC does not considers Bitcoin a security, as it's "decentralised enough". Nobody is running Bitcoin alone, selling them alone... The Ethereum sale was probably a security offering, but it is now "decentralised enough" too for the same reasons.
- garmaine 6y agoETH was classified as a security, but the regulators declined to take action. It seems they feel like they have a better case for intent to deceive here.
- ur-whale 6y agoRipple is everything you don't want in a cryptocurrency: - centralized (as witnessed by the fact that the SEC has an actual target to go after) - "pre-mined" (initial Ripple crowd gave themselves everything and once in a while toss a handful of XRP to the plebs) - controlled by scammers I'm very glad the ecosystem is doing what it's supposed to: weeding out the weak and ill-formed.
- drchopchop 6y ago... but it didn't. The SEC did. XRP has a $40B "market cap", which sums up the crypto mentality in general.
- rhacker 6y agoMeh, I don't really get why people think "market cap" is the total valuation of something. If I sold Bob a billion XRP for 1 penny, then I sold Tim 1 XRP for $40, then told Bob not to sell, and Tim can sell his for $40 (because he wants to at least get that much back), then XRP's "market cap" is worth $40 Billion, but in reality it's probably worth $40. I get that there is a lot more money in it than that, but let's be honest about something, if half the people sold Bitcoin tonight - they HAVE to get out today, it's "market cap" would likely go from nearly half-trillion to probably $300M overnight. Even though technically it should only cut in half right?
- arcticbull 6y agoThere's no such thing as market cap for a currency (after all, market caps are measured as a function of currency), but nobody knows what on earth a crypto unit is supposed to be, do or mean, so it gets weird little slices of each finance category.
- boh 6y agoAccording to the SEC, XRP isn't a currency, so it does have a market cap.
- modeless 6y agoDoes Jed McCaleb (original Ripple founder and current Stellar CTO) get off scot-free? He's sold XRP worth $175m and owns $billions more. But it looks like he may be saved by the statute of limitations! He left in 2013 and a quick search indicates that the statute of limitations may be 5 years. It would be pretty crazy if this was all ruled illegal and he got to keep it all because the SEC took longer than 5 years to get in gear. Will they go after Stellar next?
- ur-whale 6y agoThey certainly should, Stellar is pretty much structured like Ripple. Another interesting fact about McCaleb: he started MtGox (and sold it to magical tux)
- nullc 6y ago> and sold it to magical tux After it was robbed once and was insolvent without disclosing it... Also the 2011 big mtgox theft after the acquisition came in via Jed's still present administrative account (he retained administrative access because part of the terms of the sale entitled him to a share of revenue).
- nullc 6y agoI decoded some more of the indirectly referenced parties in this reddit post: https://www.reddit.com/r/CryptoCurrency/comments/kiddap/sec_files_lawsuit_against_ripple_and_two/ggrecch/ https://www.reddit.com/r/CryptoCurrency/comments/kiddap/sec_...
- modeless 6y agoWow. The guy sure knows when to get out!
- xtracto 6y agoReminds me of the CIO of SolarWinds who left last October. Pretty convenient
- cwkoss 6y agoBeen following cryptocurrency for almost a decade now. I would generalize that XRP is an asset that is primarily purchased by speculators with sour grapes that they missed <$1 Bitcoins, and hope to see the same sort of returns despite the significant differences in technology and organizational structure. I don't feel like there is much 'smart money' investing in XRP, so I think increased regulatory oversight is probably beneficial here.
- zapdrive 6y agoExactly. I'm "the Bitcoin guy" in my circle as I invested very early, so many friends seek advice and almost every one has the exact logic you mentioned.
- baby 6y agoWhich is why maybe it’s a good investment? I always buy cheap stocks because I know people feel like it’s more affordable, and has potential for larger returns, even if it ‘s not true.
- cwkoss 6y agoThe dollar price of a single unit of any tradable security-like thing is completely arbitrary: market cap, market depth and inherent value are all that really matter. Cheaper units are almost certainly not indicative of something being a better investment, I'd say the opposite is more often true: ex. penny stocks or any of the long-tail cryptocurrencies that trade at fractions of a penny.
- chihuahua 6y agoI mostly agree with what you're saying. But there is another aspect to this, based on the "greater fool" theory of investing. A lower-priced stock or cryptocurrency could be more likely to attract a larger number of unsophisticated buyers (Robinhood customers etc.) Especially for low-priced cryptocurrency, the marketing pitch of "it's like bitcoin for $1" could be very appealing, if you spread it on Reddit and other forums. So from a pump-and-dump perspective it may be more promising.
- scottmcleod 6y agoIt's been a scam coin since the beginning. Should be shut down and stopped..
- newguy1234 6y agoInterestingly enough, back in the day when ripple was first starting it was heavily promoted by the wall street crowd as being superior to bitcoin because it was "regulated". The logic was that ripple could better be incorporated into the traditional financial system because it would be easier to allow for know your customer and anti-money laundering compliance. As someone who is a huge supporter of decentralized/unregulated crypto like BTC, I am just laughing my butt off watching the SEC rip ripple to pieces like this. Hope it shuts down.
- MattGaiser 6y agoI worked in banking innovation back in 2017 and yep, that was very much the sentiment. The bank I worked for was willing to work with Ripple.
- nashashmi 6y agoIt gained credit when google ventures invested in it back when it was open coin. I laughed at the thought of a competitor to bitcoin. Like what’s the point. But when Btc had its issues, I knew then I was wrong.
- paulpauper 6y agoXRP is way better than bitcoin when it comes to usability. BTC fees very high and it's very slow.
- uptown 6y agoDoesn't bode well for XRP Capital: http://arringtonxrpcapital.com/2017/11/28/announcing-arrington-xrp-capital-a-crypto-denominated-hedge-fund/ http://arringtonxrpcapital.com/2017/11/28/announcing-arringt...
- Mtinie 6y agoRelated HN discussion about the SEC’s suit: https://news.ycombinator.com/item?id=25510979 https://news.ycombinator.com/item?id=25510979
- generalizations 6y agoShouldn't these be combined?
- Mtinie 6y agoDifferent source articles (SEC.gov and Axios). I don’t believe it’s standard to combine in this case. I expect @dang will make a determination shortly.
- Melting_Harps 6y agoNo surprise, Stellar was a pre-mined shix-coin, you have no idea how hard it was for me (Bitcoiner) at IBM listening to those imbeciles go on and on about the 'panacea' they were going to build with solidity (the worst most convoluted language I've ever encountered), hyperledger patchwork solutions and operating on ripple and stellar [0]. Those guys seriously had no idea what they were talking about 95% of the time, and despite being being one of the few that had both a Consultant with (at the time 8 years in Crytocurrency) and Developer roles prior to having my own fintech startup in Bitcoin for 4 years before that I was always the 'debbie downer' when I tried to explain the limitations of this technology and brought people back to Earth. Especially at the time as we were dealing with the war leading up to Segwit and Bcash hardfork and barely starting to make inroads with Lightning Network proofs of concept in the Bitcoin community. I'm glad I left when I did, but IBM had everything going for it in that space and despite that they still managed to cock things up because they're too blinded by their old contracting business model instead of actual innovation. They lost their vision a long time ago, and subsisting on Government and Military contracts is what probably made them this complacent. In short, now after ~10 years in Crypto you'd be an idiot to deal with xrp and I don't feel bad for anyone that gets burned; I'd prefer it died without with no State intervention, but as some of you may know we've dealt with a lot of that in Bitcoin and only came out stronger while this may kill this project entirely. Just keep that in mind when you see why Bitcoin keeps defying every possible analyzer's projections and why even its main detractors (JP Morgan et al) have had to eat their weight in crow and are trying to get in after having ruined the banking Industry yet again with their largess and corrupt business model. 0: https://thexrpdaily.com/2019/01/27/stellar-partner-ibm-confirmed-to-be-working-with-ripple/ https://thexrpdaily.com/2019/01/27/stellar-partner-ibm-confi...
- paulryanrogers 6y agoBitcoin still has serious environmental costs regardless of its use case. (Which for a currency the 7 TPS cap makes it a joke and as an asset has crazy volatility.)
- LittlePeter 6y ago> Bitcoin keeps defying every possible analyzer's projections It does not. Several people claimed Bitcoin would be in the $100K-$1,000K range by now.
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- netik 6y agoThe keyword in these charges is "information asymmetry." That's exactly what is going on here. Yet another crypto scam to benefit it's founders.
- J0_k3r 6y agoalso on my list of things the kkk and realtors have in common
- mrcartmenez 6y agoJust came her to complain that Axios articles are written in a very stupid format and that I hope the site burns down with all its editors trapped inside the server farm
- layoric 6y agoWeird hill to die on but ok, like it’s not great but extreme hyperbole is unnecessary imo.
- dang 6y agoHey, can you please not post unsubstantive comments to HN? We're trying for something different here and you've unfortunately done a lot of it. Name-calling is particularly not desirable: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. I don't want to ban you because posts like https://news.ycombinator.com/item?id=23450857 https://news.ycombinator.com/item?id=23450857 are much better.
- aazaa 6y agoThe case revolves around the question of whether XRP is a security or not. The SEC has given the definitive guidance on the topic, which is based on the Howey case: > The U.S. Supreme Court's Howey case and subsequent case law have found that an "investment contract" exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.[5] The so-called "Howey test" applies to any contract, scheme, or transaction, regardless of whether it has any of the characteristics of typical securities.[6] The focus of the Howey analysis is not only on the form and terms of the instrument itself (in this case, the digital asset) but also on the circumstances surrounding the digital asset and the manner in which it is offered, sold, or resold (which includes secondary market sales). Therefore, issuers and other persons and entities engaged in the marketing, offer, sale, resale, or distribution of any digital asset will need to analyze the relevant transactions to determine if the federal securities laws apply. https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets https://www.sec.gov/corpfin/framework-investment-contract-an... Ripple (as distinct from the XRP token it created), currently holds a large block of uncirculated XRP created at the beginning of the network. This network does away with mining in favor of the Ripple Protocol Consensus Algorithm: https://ripple.com/files/ripple_consensus_whitepaper.pdf https://ripple.com/files/ripple_consensus_whitepaper.pdf This protocol foregoes mining in favor of a system without proof-of-work. The tradeoff (or feature, depending on how you look at it) was that the distribution mechanism would involve Ripple itself giving away and selling XRP. This gave Ripple complete control of the money stock at the network's inception. This is very different from how Bitcoin currency distribution works.
- raiyu 6y agoIn layperson terms with Bitcoin you can’t sue the network. With ripple you can. Bitcoin wasn’t sold by a company entity and xrp was.
- xorcist 6y agoThen so was Ethereum, yet they seem to be off the hook. And they are also moving to a distribution model where the owners gets to mint and sell too. Thus far, it was said that it was sufficiently long ago for the initial distribution to not matter anymore. But all that is true for Ripple, too. Not to defend Ripple or any one else project, but a casual observer could be forgiven to suspect more things have happened behind the scenes than what is being communicated.
- codecamper 6y agoSome of Trump's men now acting like they should so they can keep their job with Biden?
- Triv888 6y agoUsually posts talking about the same subject are removed almost immediately on HN, but not in the case of Ripple news.... You are very selective about what you sensor. Disclosure: I have no stake in Ripple
- nullc 6y agoHm? SEC actions against ICOs and whatnot have been regularly covered on HN. Even cryptocurrency aside, government enforcement against unlawful forms of non-traditional finance is something many people are interested in. More than a few people here have faced the decision of accepting a more traditional legal fund-raising model or trying some vaguely legal ICO scheme that put them in direct competition in the fundraising market with outright scammers and had to make hard decisions. Enforcement actions make it clear that people who chose to avoid those waters weren't just leaving money on the table for no reason.
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- paulpauper 6y agoLook like xrp is going to zero. lawyers from both sides will fight for years over the fate of the table scraps that remain. similar to Enron , in which the stock price went to zero in less than 3 months and the legal battle would ensure for over a decade about what to do with the little money that remained.
- CryptoPunk 6y agoI'm no fan of Ripple, but any prohibition on securities-related investment contracts completely violates the freedom of contract.