XRP Is Not an Investment Contract
The only question in this case is a technical one: whether or not Ripple’s limited distributions of XRP were an investment contract. To be clear, there are no allegations of fraud, misrepresentation, etc.
While we’ve seen some Twitter commentators suggest this is a non-fraud/fraud case, a first year law student can tell you that there is no such thing. It’s misleading and irresponsible (not to mention silly) to even suggest otherwise. Turning to what matters….
In our “Answer,” we explain why there is no “investment contract”: 1. XRP is a virtual currency and thus, outside the SEC’s jurisdiction. 2. Ripple has never entered a contract for an investment with any holders of XRP. 3. Ripple never held an ICO, never offered future tokens to raise money and has no relationship with the vast majority of XRP holders. 4. Holding XRP does not mean a person receives a portion of Ripple’s revenue or profits. 5. Ripple’s XRP sales amounted to far less than 1% of the massive XRP market that has grown over the last 8 years. 6. The XRP Ledger, on which XRP actually moves, is completely decentralized. The SEC ignores the economic reality of an XRP transaction. 7. Ripple’s XRP holdings do not create an investment contract any more than DeBeers holdings convert diamonds into securities.
Before this case, no securities regulator in the world has claimed that transactions in XRP must also be registered as securities, and correctly so. The functionality and liquidity of XRP are wholly incompatible with securities regulation. Requiring XRP’s registration as a security would impair its main utility.
In fact, regulators in the US government (the Department of Justice and FinCEN) determined in 2015 and 2020 that XRP is a virtual currency and have since regulated it as such. Basically, on its way out, the Trump administration sought to undo the determination that XRP was a virtual currency made during the Obama administration.
Globally, the same is true of regulators the UK’s Financial Conduct Authority, and regulators in Singapore and Japan have concluded XRP is a virtual currency or a crypto asset, and not a security. With its complaint, the SEC is asking the Court to contradict the findings of the agency’s peers in the US and worldwide.
More Visit: https://whatisxrp.com/