In this article, a lawyer dissects the secret XRP memo and delves into the details of a private meeting between the Securities and Exchange Commission (SEC) and Ripple. The lawyer provides insights into the controversy surrounding XRP and Ripple, discussing the potential impact on the cryptocurrency market. This analysis sheds light on the ongoing legal battle and its implications for both Ripple and the SEC.
Title 1: SEC Memo Suggests Ripple’s Legality in XRP Issuance, Claims Crypto Lawyer
A little-discussed memo from the Securities and Exchange Commission (SEC) from five years ago may suggest that the agency faced internal struggles in concluding whether XRP was a security, according to crypto lawyer John Deaton. This revelation could potentially cast doubt on the SEC’s allegations of Ripple’s legal recklessness in issuing the token.
According to Deaton, the memo known as the “Howey memo” was written by SEC enforcement lawyers and was received by SEC chair Jay Clayton and Commissioner William Hinman on June 13, 2018. Interestingly, this was just one day before Hinman delivered a speech suggesting that Ethereum (ETH) may not be a security, while conveniently leaving out any mention of XRP.
Deaton further reveals that three months later, Ripple CEO Brad Garlinghouse and CTO David Schwartz had a meeting with Clayton and Hinman, during which they inquired about why XRP had been excluded from Hinman’s speech. The significance of this meeting is highlighted by the fact that at the time, both ETH and XRP were vying for the position of the second-largest cryptocurrency by market cap. However, ETH managed to gain an advantage over XRP after the speech was published.
Referring to the meeting notes taken by Hinman’s Special Counsel, Deaton points out that Garlinghouse expressed frustration over the lack of regulatory clarity for XRP. The Ripple CEO described his company as being stuck in a state of “purgatory” due to the SEC’s vagueness on the matter.
This leads Deaton to infer that since Clayton did not mention XRP’s security status during the meeting, the Howey memo received by the SEC months earlier must not have definitively concluded that XRP was a security. Furthermore, the lack of any enforcement action shortly after the memo’s publication also suggests that the SEC had likely not reached a conclusive decision at that time.
The implications of this revelation are significant. Deaton questions the SEC’s accusation of Ripple’s recklessness in not recognizing that XRP was being sold as a security between 2013 and 2015 when the SEC’s own enforcement lawyers struggled to determine XRP’s security status in 2018.
It should be noted that Judge Analisa Torres recently ruled that institutional sales of XRP were securities transactions, but secondary market sales were not. Additionally, she stated that XRP itself did not violate securities law. The SEC, however, is seeking to appeal the ruling, arguing that there is room for disagreement between courts on the matter.
Title 2: Ripple’s Legal Battle: Examining the SEC Memo and Implications for XRP
A memo from the Securities and Exchange Commission (SEC) that emerged five years ago sheds new light on the agency’s internal struggles in determining the legal status of XRP, the cryptocurrency associated with Ripple. This development, as highlighted by crypto lawyer John Deaton, challenges the SEC’s allegations of Ripple’s recklessness in issuing the token.
The memo, dubbed the “Howey memo,” was authored by SEC enforcement lawyers and was received by SEC chair Jay Clayton and Commissioner William Hinman on June 13, 2018. A day later, Hinman delivered a notable speech in which he discussed the potential security status of Ethereum (ETH) but conveniently omitted any mention of XRP.
Ripple’s CEO Brad Garlinghouse and CTO David Schwartz later met with Clayton and Hinman, seeking clarification on why XRP had been excluded from the speech. Notably, at that time, both ETH and XRP were competing for the title of the second-largest cryptocurrency by market capitalization. However, following Hinman’s speech, ETH gained an advantage over XRP.
Based on the meeting notes taken by Hinman’s Special Counsel, Deaton reveals that Garlinghouse expressed frustration over the lack of regulatory clarity for XRP, describing Ripple as being in a state of “purgatory.” Interestingly, Clayton did not mention XRP’s security status during the meeting, leading Deaton to suggest that the Howey memo may not have definitively concluded that XRP was a security.
Deaton points out that the absence of any enforcement action shortly after the memo’s publication further supports the notion that the SEC had not arrived at a conclusive decision regarding XRP’s security status at the time. This raises questions about the SEC’s accusation of Ripple’s recklessness in not recognizing XRP’s security classification between 2013 and 2015.
It is worth noting that Judge Analisa Torres recently ruled that institutional sales of XRP were indeed securities transactions, while secondary market sales were not. She also determined that XRP itself did not violate securities law. However, the SEC plans to appeal the ruling, emphasizing the potential for varying interpretations among different courts.
The emergence of the SEC memo adds a new layer of complexity to Ripple’s legal battle, as it suggests internal uncertainties within the agency regarding XRP’s status. It remains to be seen how this revelation will impact the ongoing litigation and the broader regulatory landscape surrounding cryptocurrencies.