Ripple vs SEC

Abraham George Market Musings

To follow up on my writings on XRP/Ripple, I am a little confused about where to start as there is a lot to write. With no real particular order, let me start with the management and board structure of Ripple and then discuss a bit with the ongoing case that Ripple is having with the SEC.

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Sometime back I had written a lot about the genesis of Ripple and how it has transformed to where it is now. Currently the three most important people who are running ripple are Chris Larsen (Chairman), Brad Garlinghouse (CEO) and David Schwartz (CTO).

I don’t think you need any more explanation on Chris Larsen as I had written a lot about him in my previous writings. Mr Larsen has an impeccable record and reputation as an efficient manager and business executive.

Brad Garlinghouse is a Harvard educated veteran of over 20 years who held senior positions at Yahoo and AOL. Currently, he is the face of Ripple and represents Ripple at all senior level meetings and conferences.

David Schwartz is the Chief Cryptologist and a super nerd who is one of the original architects of the Ripple XRP ledger who started Ripple with Jed McCaleb. McCaleb later left the team due to a rift and launched XLM/Stellar. As founder’s payment, McCaleb was given 9 bio XRP coins for which the Ripple management had drawn out strict guidelines if he wanted to sell them in the open markets. Jed has been selling XRP from 2014 and has sold about 4.8 bio XRP. With the accelerated amount, he can sell on a daily basis now, he could be exhausting his holdings by end of September.

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One thing to note is, who is buying his selling? I doubt it is the retail. These sales are being mostly absorbed by some institutions. Once this selling dies down, a natural bid should arise for XRP which is independent of the current buying.

While Chris Larsen and Brad Garlinghouse are billionaires many times over, the Ripple’s board members also come with very strong financial backgrounds and academic credentials. One person of repute who recently joined the Ripple board is Rosie Rios, the 43rd treasurer of the United States under the presidency of Barack Obama. Her signature appears on the 100 dollar bills. She joined the Ripple board in Nov 2020.

SEC sued Ripple in Dec 2020 accusing ripple that Ripple sold $1.3 bio of unregistered securities offering in 2013. Larsen and Garlinghouse were also personally sued. SEC probably never realized that they were putting their head into a hornet’s nest, for the way the case has gone so far. In 96% of all past cases the SEC has gone for a settlement in their favour with the counterparty. The other 4% have been found guilty of some serious wrong doing and been banned from the industry. This case between Ripple and SEC is turning out to be something very different.

Judge Sarah Netburn who presides over the case passed 14 motions in favour of Ripple. Finally SEC requested a delay of another two months for the case to which Netburn granted in favour of SEC despite Ripple’s opposition. Even with that the SEC seems to be digging their legs into deeper quick sand and it is opening a can of worms questioning the functioning of the SEC. Public opinion is clearly turning against SEC. Those who are interested more in the story should google up. Let’s get more into understanding the business of XRP and how it scores versus other cryptos in the next report.

Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.