D-Day for SEC v. Ripple: Legal advice on whether XRP is a security unsealed

Rick Steves

February 17 was yesterday: we have covered the news in two articles. Links below.

The SEC v. Ripple lawsuit has had two major updates yesterday. 

Ripple revealed a piece of advice given by law firm Perkins Coie LLP as the defendants seek full disclosure of the legal memos “so that the public can review the SEC’s characterizations of those documents in their full context”.

The SEC explicitly said Hinman’s speech was public guidance as it tries to put those drafts and related notes back in the DPP box. This is a turn of events as for many months, the agency denied Ripple the opportunity to analyze the speech in its defense by claiming it was onlyl a personal opinion.

Outdated piece

Two weeks ago, Judge Analisa Torres ordered Ripple to unseal documents pertaining to legal advice it received regarding the regulatory standing of XRP tokens.

The unsealing of those notes is scheduled for today, February 17, and they may help determine the outcome of the SEC v. Ripple lawsuit.

XRP utility won’t mean much if Ripple was advised to register with the SEC

Ripple’s fourth affirmative defense, which claims the SEC failed to provide fair notice that XRP could be considered a security according to the regulatory framework, could be in trouble if past legal advice pointed to near certainty that the SEC would come knocking at the door if the firm didn’t register with the agency and that the Howie Test and its four criteria were clear enough even for the digital asset.

The abovementioned legal advice was sought by Chris Larsen back in 2012. The law firm submitted two memos in which it had analyzed all the legal scenarios stemming from the issuance and sale of XRP.

Throughout the lawsuit, the SEC claimed Ripple and its executives were advised to treat XRP as a security but chose to proceed with the fundraiser, which began in 2013, “through the sale of digital assets known as XRP in an unregistered securities offering to investors in the U.S. and worldwide”, as per the complaint.

The argument of utility would likely lose its strength if the court does find out that Ripple knew that XRP was a digital asset security, according to the legal advice it obtained in 2012.

Attorney Jeremy Hogan says SEC’s strategy is the right one

Attorney Jeremy Hogan, partner at Florida-based Hogan & Hogan law firm, was asked how he would play the SEC’s cards and he “agreed” with the strategy.

“They don’t have a bad strategy right now. They’re trying to frame it in the exact same way Judge Torres has seen before, making it really simple”, he said.

The plaintiff’s “simple” strategy consists of gathering all the evidence, going to the judge, and say “when these people bought XRP, the only use cases were something that Ripple had developed. So, they were looking at ripple to increase the value of XRP”, Hogan explained, adding that the SEC is also trying to downplay the fair notice defense.

“We’ve had the Howie test since 1934 with its clear four criteria. There’s no reason Ripple couldn’t have read these tests back in 2013”, Jeremy Hogan hypothetically argued on behalf of the SEC.

“We’re not required to go to every company and explain the laws. It’s impossible to do so”, he continued, adding that the SEC is keeping the section 5 violation simple. “They’re absolutely looking at Ripple for profit”.

“I don’t have to explain to them whether they are in violation of the law. I’m the regulator. I’m the police. if someone breaks the law, I arrest them and take them to jail. That’s gonna be the SEC position”.

Attorney Hogan said that will 100% be how they approach the case, although it is unknown how much evidence the plaintiff has to support its claims.

The next question would be if Ripple doesn’t win, then what will be the future of XRP?

BREAKING: Ripple legal advice on XRP revealed, including “do not sell coins”

Read this next

Metaverse Gaming NFT

Despite crypto winter, Fastex grabs $23.2 million in Fasttoken token sale

Fasttoken, part of the Fastex web3 ecosystem, has secured $23.2 million in financing through the private and public token sales of its native cryptocurrency Fasttoken (FTN).

Digital Assets

Iran to repay Russian debts in gold-backed stablecoins

A high-ranking member of the Russian parliament confirmed reports that his country was in talks with Iran to create a stablecoin for foreign trade settlements, to replace the dollar, ruble and Iranian rial.

Digital Assets

SEC denies Cathie Wood’s bitcoin ETF for second time

The approval of a regulated crypto derivative is still looking far less likely, as the US regulators have once again denied Cathie Wood’s application for a long-awaited spot bitcoin exchange-traded fund (ETF).

Executive Moves

Pavel Spirin promoted to Scope Markets CEO following Rostro acquisition

Belize-based FX and CFDs brokerage Scope Markets has promoted Pavel Spirin to take on an expanded role as the company’s chief executive officer. He replaces the outgoing CEO Jacob Plattner, who has also been a major shareholder since he resigned his position as managing director at GKFX.

Retail FX

Public.com goes all-in on alternative investing, launches Rare Sneaker Portfolio

“The concept of curated Portfolios means that our members will be able to invest in categories like art, trading cards, royalties, and real estate without needing to become subject matter experts on individual assets.”

Industry News

State Street taps AWS and Microsoft for cloud and infrastructure solutions

“By standardizing and simplifying our technology operating model, we will be able to more quickly deploy client environments and launch new products and services, while continuing to enhance the resiliency of our technology environment and our business operations.”

Institutional FX

Bitpanda launches Investment-as-a-Service business for banks, fintechs, online platforms

“Financial institutions today have to ask themselves how they aim to cater the increasing demand for modern investing solutions. Building these Individually, means a high startup cost, and products that are often outdated before they are even launched.”

Institutional FX

Options expands market data feeds after partnership with Tools for Brokers

“Our integration with ACTIV Financial marked the beginning of a new era in market data availability and infrastructure. Our teams have come together to provide unparalleled, fully managed market data services alongside Options’ global connectivity and infrastructure.”

Industry News

Recruitment in financial services sector buoyant despite planned mass layoffs

“It remains to be seen what impact this will have on hiring levels within the financial services arena this quarter”, said APSCo, regarding the expected mass layoffs within the financial services sector in England & Wales. 

<