On Christmas Eve of 2020, Ripple was formally sued by the SEC. On the one hand, looking at public opinion at home and abroad, it seems that if you do not step on XRP today, you are not considered a currency player. On the other hand, this also makes the volatile alt market even worse.
The most basic way to figure out this is actually very simple, just look at the original SEC documents.
According to the original text of the SEC, the points of the hammer are as follows:
1. From 2013 to the present, the defendant has continuously sold more than 14.6 billion XRP, in exchange for a total of more than $1.38 billion in cash or other consideration assets, to fund Ripple’s operations, and to make Ripple’s two executives Larsen and Garlinghouse Get rich.
2. Ripple has never submitted a registration statement for XRP (public offering financing needs to go through SEC registration review), and the two executives have the largest control of XRP (centralization). New XRP can only flow from them to the market, here Formed information asymmetry, bringing huge risks to investors.
3. Ripple received legal advice as early as 2012. In some cases, XRP may be regarded as an “investment contract” within the scope of securities stipulated by the Federal Securities Law, but Larsen and Garlinghouse ignored it. Continue to issue XRP.
4. Part of the funds obtained from the sale is used for marketing and to various market makers or third parties to maintain the liquidity of the XRP secondary trading market and sell XRP on behalf of the company. At the same time, Ripple has previously announced the business plan. The use of XRP is alleged in the document as that the purpose of this move is to sell XRP to as many speculators as possible.
Ripple boasted that XRP might be used by some professional organizations in the future, selling XRP to those who would not actually use it, and the uses they advertised do not exist in most cases, and even Ripple exchanges the currency for some cooperation The situation where the partner resells to the secondary market.
Of these illegal sales, nearly $600 million has also entered the personal pockets of executives.
5. The defendant once admitted in a private communication that the main reason why people buy Ripple is to use it as an investment or to speculate. In July 2019, a senior vice president of Ripple sent an email to the CEO of United stating that Ripple is seeking to make XRP available for digital asset trading company national branch transactions. In the email, he explained: “Currently the main use cases of XRP are speculation and exchanges…the main drivers of this use case.”
The above will also become the court evidence for the issuance of unregistered securities.
6. A little historical gossip, Ripple also has a wonderful incentive mechanism. According to a piece of information on December 13, 2016, if executives can increase the trading price and volume of the new currency, they can get up to 500 million Ripple options. The weighted average price of XRP is “at least $0.02/XRP” for four consecutive weeks and the weekly trading volume of Ripple remains at $1.4 billion for at least four consecutive weeks.
The following is the key point. At the end of the SEC document are the penalties that this lawsuit hopes to take:
1. It is forbidden for the defendant and intermediary agents to conduct unregistered XRP sales.
2. Give up ill-gotten wealth.
3. The defendant is prohibited from participating in the issuance of any digital asset securities.
4. Pay civil fines.
5. To grant certain relief (question mark face) to investors who may be deemed legitimate and appropriate by the court.
Whether the above can be implemented or not is a matter of two, but it can be said that the best result is a settlement of fines. If the SEC wins, XRP may really face the risk of delisting mainstream platforms.
The aforementioned Katherinewu also gave her a point of view. From a positive point of view, the worst case is actually just forbidden, and it has not been caught or caught. . (Of course, there are already such rumors on the market).
However, it should also be noted that the biggest difference between this lawsuit and previous lawsuits on other projects is that it directly named two executives, not just the company. This has not been done in the encryption field. It can be seen that the situation is still a bit serious, and katherinewu also One thing to mention is that the lawsuit against Ripple did not begin today. Those who pay attention to the news may have an impression that Ripple’s lawsuit has been in the case for many years. It seems that an agreement similar to the suspension of litigation can be signed (I haven’t done it too much. Understand), the latest expiration is the end of this month. During this period, it can be used to negotiate a settlement, so Katherinewu also thinks that it is possible that their negotiation has failed, and that may not be the issue of making up a fine.
Conclusion
The above is about Ripple. Today not only caused the xrp to crash, but the copycat market also experienced panic in varying degrees. However, this matter may not be resolved for a while, and we will follow up on the news later.
Others today are a bit accidental. After all, most of them don’t talk about currency morality as much as Ripple, but if you really start with xrp later, it will still cause some turbulence in the market. Of course, if not, the currency circle memory is only 7 seconds, which is not enough. To mention, after all, there is no clear regulatory guidance.
The xrp matter can also be regarded as a reminder. Bitether will be slightly better. Those who are more worried about this level of risk can pay attention to their positions. But in fact, everyone knows that this itself is a more speculative market with hot money. Even institutions may not really think about any store of value. For a financial market with no threshold, no one is truly innocent, no matter the degree.
It is also possible that in the future, more new coins will choose the form of airdrop or mining to circumvent, but can this be guaranteed not to be manipulated? It’s also difficult.
