Finally, after 18 months of deliberations and about six court orders, the SEC has finally given the William Hinman emails to Ripple. This came totally out of the blue and most knowledgeable interpreters of this case are alluding to the theory that dragging this case longer is hurting the SEC more than Ripple with all that has been exposed so far.
I have been an ardent follower of this case since Dec 2020 and I cannot believe an agency that should be protecting the investors, particularly the retail investors, and setting the right procedures and systems will stoop down to such levels of shenanigans and chicanery.
After having lost everything on this case at all its hearings other than getting time extended the SEC is still hanging on to many arguments that are laughable.
Even my 10-year-old grandson can see through who is right or wrong if both the SEC and Ripple points are laid out and explained to him. The SEC still wants to lie to the courts and tell the judges that the “hare we caught has three ears.” I strongly feel the judges are fed up with the SEC and so far they have shown tremendous patience and restraint only because of the authority and the position SEC holds in the regulatory arena.
Ripple is not allowed to disclose the Hinman e-mails as yet and when the CEO of Ripple Brad Garlinghouse tweeted that he cannot think of the shamefulness that the SEC will have to go through when it is released to the public, Elon Musk tweeted back saying ‘No Way’. Musk had his fair share of showdown with the SEC and he surely has some axe to grind.
One of the main arguments that the SEC had put to the courts is that the XRP has no use case. To add insult to injury about 7 institutions have filed their ‘amicus brief’ explanations on how they are using XRP and all have been accepted by the court. The most interesting one I saw was that of the private jet company called Tapjets. Firstly I didn’t know there was an Uber equivalent for flying as I fly coach. Tapjets uses XRP extensively especially on a weekend when the banks are closed and their rich customers or business contacts have to make emergency travel the payments can be made using XRP in less than 5 seconds.
The most important filing of the “Amicus Curiae” will come from the class action act filing of John Deaton from crypto law. He is representing around 75,000 XRP holders. Don’t think the judge can overlook that as they all have signed an affidavit stating that they did not buy XRP expecting the business prospects or appreciation of Ripple as a company. They don’t have an investment contract as it will be a security. If Exxon sells oil and you bought oil doesn’t mean you have an investment contract with Exxon or you have a stake in the company. XRP is not a security. Period. The SEC is crazy.
When the SEC was confronted with this information their reply was that they are too busy to look into all this information. Can you believe, this is the biggest case that the SEC’s rules and laws will be tested upon since the Howey test was introduced 76 years back? Once this case is over it will no more be the Howey test but the Ripple test.
All SEC’s efforts to prove XRP is security has been stupid and at best childish. The SEC clearly has resorted to a land grab trying to twist the judiciary arm in regulating cryptos. They have no authority from Congress and if they had they would have exercised it. If you see the SEC Chairman Gary Gensler as a hammer, he is seeing every crypto as a nail. After seeing so many irregularities and wastage of taxpayers’ money, it is a pity that Congress so far has not announced an investigation into the SEC functioning.
Ripple clearly is in a position of strength. There are some event risks associated with the case on 24th Oct and 15th Nov. Everything depends on the SEC now if they want to settle or not. Stuart Alderoty the General Counsel of Ripple said they will be willing to settle with the SEC if they will declare that XRP is not a security. If not Ripple is willing to go the distance and get the decision done by a jury trial.
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and multi-billion dollar portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office, and a hedge fund.