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Ripple CEO says legal memos prove XRP not a ‘security’; how accurate is it

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In 2012, Ripple reached out to a legal company to get a review of its business model and obtain recommendations for reducing legal risks. After the company’s first analysis, Ripple went back to the drawing board and submitted a new proposal.

Now, ten years later, the legal memos have been unsealed as part of the SEC vs Ripple lawsuit, and emotions are running high.

Ready to let rip

Ripple CEO Brad Garlinghouse, said,

“The truth is out for everyone to read. What we see is that the SEC waited 8 years to decide they disagreed with this analysis, decimating thousands and thousands of XRP holders (who they purport to protect) in the process. So much for being mission-driven…”

Meanwhile, Ripple General Counsel Stuart Alderoty claimed that the memos confirmed that XRP was not a security. Furthermore, he added,

“The fact that Ripple had the foresight to seek legal advice from a prominent firm in 2012 – in the absence of clear case law and 5 years before the SEC even started talking about digital assets – should be applauded…”

Don’t be so insecure

But the question stands – what exactly did the law firm say? Perkins Coie, which even the SEC called “reputable,” stated,

“Although we believe that a compelling argument can be made that Ripple Credits do not constitute “securities” under the federal securities laws, given the lack of applicable case law, we believe that there is some risk, albeit small, that the Securities and Exchange Commission (“SEC”) disagrees with our analysis.”

Investors should note this is a long way from confirming that Ripple Credits – which we know as XRP – was not a security. In fact, this is where the problem lies. While Ripple execs defend XRP, the SEC has claimed that Ripple ignored several recommendations by the legal firm ‘in order to raise hundreds of millions of dollars to fund its operations.’

To be [security] or not to be?

On Fox Business News, former CFTC chairman Chris Giancarlo was asked for his take on whether XRP was a security or not. For his part, Giancarlo made it clear that he thought XRP was not a security, based on a past legal review applying CFTC standards.

About regulation, he said,

“We need Congress to step in, and in a bipartisan – and it must be bipartisan so it stands the test of time – in a bipartisan manner, establish a regime to regulate this new development.”


Sahana is a full-time journalist at AMBCrypto. She has a Masters in Journalism and her areas of study include crypto-regulation, digital society, privacy, and intersectionality. Ask her about film photography and philately.
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