Kevin O’Leary says XRP lawsuit is “a very bad idea”

Rick Steves

“I have zero interest in investing in litigation against the SEC, that is a very bad idea”.

Kevin O’Leary, the celebrity investor known for his leading role on the TV show “Shark Tank” said he’d consult with the SEC rather than invest in litigation.

The billionaire investor, who has recently become a spokesperson for cryptocurrency exchange FTX, indirectly called Ripple a “crypto cowboy”.

“I have no interest in being a crypto cowboy and getting anybody unhappy with me because … I have so many assets in the real world that I’ve invested in already that I have to be compliant”.

Zero interest in litigation against the SEC

Rather than being a “crypto cowboy”, O’Leary would consult with regulators in order to see “what is possible and what isn’t” and choosing litigation instead of a quick settlement seems to be unthinkable for him.

“I have zero interest in investing in litigation against the SEC, that is a very bad idea”.

The U.S. Securities and Exchange Commission filed a complaint against Ripple in December 2020 alleging the blockchain company and its executives sold $1.3 billion worth of XRP in an unregistered securities offering.

Is XRP a security?

One of the key points in the lawsuit is whether XRP can be considered a security. The Howie test says that an investment contract (security) exists when these four conditions are met: investment of money in a common enterprise with the expectation of profit to be derived from the effort of others.

A recent research report by JP Morgan said if the Judge determines that one or multiple points are not met, Ripple will win the suit and if that happens “and trading resumes on major cryptocurrency exchanges like Coinbase, XRP is poised for significant adoption”.

The investment bank will host its J.P. Morgan Crypto Economy Forum on November 30 and Coinbase CEO Brian Armstrong and Lead Independent Director Fred Wilson will participate in the fireside chat.

‘Crypto Mom’ said XRP lawsuit is not about a security status

While Ripple’s defense argued throughout the lawsuit that XRP has utility rather than being a security, SEC Commissioner Hester Peirce explained in June what is the SEC’s intention when filing a complaint against a firm for an unregistered securities offering.

“When we think about a cryptoasset as being a security what we’re doing is we’re saying it’s being sold as part of an investment contract. It doesn’t mean that the asset itself necessarily has to be a security. It means that it was being sold as a security.”

The Commissioner also known as “Crypto Mom”, like other SEC officials, cannot discuss publicly about the ongoing lawsuit, but her words show that, for the SEC, the lawsuit is not about the nature of XRP but about how the digital asset was marketed and sold.

On that, Judge Sarah Netburn has recently ordered Ripple to deliver more recordings of its meetings. The SEC will be looking for whether the individual defendants and Ripple executives talk about XRP more like a share of stock rather than a digital token. This would strengthen the SEC’s case.

On the other hand, the Judge ordered the explain a lot via RFAs on many fronts, from XRP sales offshore to questions relating to the fair notice defense and whether the XRP ledger was “fully functional” when the sales took place in 2013. The Hogan attorneys offered their analysis on this major win for Ripple.

Ripple argues that XRP ledger was fully functional when the sales took place in 2013, which would they weren’t part of an investment contract under the Howie test.

The defendants are also invested in the fair notice defense, claiming that the SEC failed to let them know in due time that what Ripple and its executives were doing could be construed as an unregistered securities offering.

A summary judgment on the fair notice defense could create a precedent that would likely weaken the SEC‘c practice of regulation by enforcement in the digital asset space. For now, the lawsuit is in the middle of the expert discovery.

Read this next

Institutional FX

Integral also grapple with weak FX volumes in December

Foreign exchange trading volumes dropped in December across Integral’s trading platforms as many traders were away on annual leave and currency markets saw a relatively quiet period. December volumes outpaced those of last year, though turnover is still down month-over-month.

Digital Assets

BitMEX to turn German bank into regulated crypto products powerhouse in Europe

The historic German bank is already a leader in the application of blockchain technology and offers a range of digital assets banking services, including custody, tokenization, efficient payment transactions, and regulatory secure market access.

Industry News

CryptoUK appoints Teana Baker-Taylor as non-executive director

“CryptoUK is moving the needle on policy and regulatory framework development to ultimately build trust and protect all participants, from retail investors to the crypto industry players”

Retail FX

Skilling raises €10m to expand brokerage further after triple-digit growth in 2021

“This fundraising round represents the beginning of the next phase of Skilling’s growth as we further assert ourselves in the fintech industry”

Industry News

oneZero adds two more FX veterans, Indu Maheshwari and Kevin Verardi

The news of Indu and Kevin’s appointments comes a month after Jim Sullivan was announced as the company’s General Counsel, where he will be responsible for the company’s global legal function, based in New York.


Pareto Securities goes live with Broadridge’s OMS for low and high touch agency trading

The solution combines order management, market connectivity and smart order router (SOR) components developed by Itiviti, which was acquired by Broadridge last year in a $2.5 billion deal.

Retail FX

INGOT Brokers taps Acquity and Signal Centre for MT4/5 EAs and news analytics

INGOT Brokers is helping traders cut through the noise and get a clearer picture of the emerging market trends as well as better spot trading opportunities with AI-powered signals.

Digital Assets

Can the Ripple lawsuit be traded with Wrapped XRP to circumvent XRP delisting in US?

wXRP is a derivative product that is pegged to the digital asset that the SEC claims to be a security in what has been dubbed “the cryptocurrency lawsuit of the century”.

Digital Assets

e-CNY wallet downloads swell, but actual usage disappoints

China’s central bank has released a wallet app for payments and money transfers using the digital yuan earlier this month. Although the e-CNY wallet was the most downloaded app in January, but according to a Reuters report the actual use in transactions has been far less impressive.