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The 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 c

by aazaa 6y ago

The 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 ago
In 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 ago
  Then 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.
  - doggosphere 6y ago
    When did ethereum offer tokens for sale?
    - mythrwy 6y ago
      2014
    - arthurcolle 6y ago
      In late 2013, with expected delivery December 2014. I was poor, in college, and turned $70 of Bitcoin during the presale into $40,000 of Ethereum when I sold in late 2017. Do I get to call myself an angel investor now? ;)
      - 1996 6y ago
        Not until you get at least one more zero
    - nullc 6y ago
      Ethereum's managers pre-mined 72 million coins, kept about 12 million to sell at later times, and sold many to the public (and also "sold" many to themselves personally, though we only know of the self-buys they chose to disclose-- the structure guarenteed more coins for insiders the more that they raised from the "public" so there was a big incentive for insiders to anonymously participate in the public sale). They forbid US persons from purchasing in their sale, which might be part of the reason the SEC never took action even though many people ignore the prohibition. You might assume that fact that they've subsequently lied and dissembled about the massive premine, or multiple times reduced the issuance rate of mined coins to prop up the price as they sold their own premined positions might count against them, but apparently not.
      - CryptoPunk 6y ago
        >>You might assume that fact that they've subsequently lied and dissembled about the massive premine, Who's "they". No one has lied about the premine. The crowdsale is well-documented by Ethereum-based information resources and there has been absolutely no effort to conceal or mislead about it. >> or multiple times reduced the issuance rate of mined coins to prop up the price as they sold their own premined positions might count against them You're conflating the community, which is the amorphous entity that has reduced the issuance rate, in accordance with a long-standing plan to adjust it to balance the need for security, and the need for token store-of-value functionality, and the Ethereum Foundation, which has no say in the hard forks that the community choose to support or not support.
OpticalWindows 6y ago
Thank you for your great writeup and sources.

by aazaa 6y ago

raiyu 6y ago

In 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 ago
Then 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.
- doggosphere 6y ago
  When did ethereum offer tokens for sale?
  - mythrwy 6y ago
    2014
  - arthurcolle 6y ago
    In late 2013, with expected delivery December 2014. I was poor, in college, and turned $70 of Bitcoin during the presale into $40,000 of Ethereum when I sold in late 2017. Do I get to call myself an angel investor now? ;)
    - 1996 6y ago
      Not until you get at least one more zero
  - nullc 6y ago
    Ethereum's managers pre-mined 72 million coins, kept about 12 million to sell at later times, and sold many to the public (and also "sold" many to themselves personally, though we only know of the self-buys they chose to disclose-- the structure guarenteed more coins for insiders the more that they raised from the "public" so there was a big incentive for insiders to anonymously participate in the public sale). They forbid US persons from purchasing in their sale, which might be part of the reason the SEC never took action even though many people ignore the prohibition. You might assume that fact that they've subsequently lied and dissembled about the massive premine, or multiple times reduced the issuance rate of mined coins to prop up the price as they sold their own premined positions might count against them, but apparently not.
    - CryptoPunk 6y ago
      >>You might assume that fact that they've subsequently lied and dissembled about the massive premine, Who's "they". No one has lied about the premine. The crowdsale is well-documented by Ethereum-based information resources and there has been absolutely no effort to conceal or mislead about it. >> or multiple times reduced the issuance rate of mined coins to prop up the price as they sold their own premined positions might count against them You're conflating the community, which is the amorphous entity that has reduced the issuance rate, in accordance with a long-standing plan to adjust it to balance the need for security, and the need for token store-of-value functionality, and the Ethereum Foundation, which has no say in the hard forks that the community choose to support or not support.

OpticalWindows 6y ago

Thank you for your great writeup and sources.