Posted 10 months ago | by Catoshi Nakamoto
A heatwave is gripping the country. But nowhere is hotter right now than a New York City courthouse, which saw yet another plot twist in the Emmy-award-winning courtroom drama, ‘SEC vs Ripple Labs’. Today, we’ll be looking at what could this mean for XRP and it’s devoted army, crypto regulations as a whole, as well as checking out some upcoming developments to the XRP ecosystem.
Let’s Get It!
Welcome to BitBoy Crypto, home to the BitSquad and the largest and greatest crypto community in all the interwebs. My name is Ben. Every day, I show you how to make money in crypto. If you like money and crypto, make sure to hit that subscribe button. In this video I give my deposition on the latest XRP news and update my price predictions on XRP for the rest of the year.
The SEC and Ripple Labs have been engaged in a sizzling legal dispute since December 2020, and it all boils down to whether XRP can be considered a security. It’s a landmark case and all eyes are on it, because the verdict won’t just send ripples through the crypto community, but huge shockwaves that could play a key role in regulations for decades to come.
The latest episode of SEC vs Ripple Labs saw the defendents gain the upper hand. In a letter delivered to the Judge, Ripple’s legal counsel cited a public statement released by two of the SEC’s five commissioners, Hester Peirce and Elad Roisman. Who I’d imagine must be enjoying life in Gary Gensler’s dog house right about now.
The statement had been released in response to a different case, but unfortunately for the SEC, it’s relevent here because it refers to the “decided lack of clarity” around how securities laws apply to digital assets. Sitting at the heart of the debate is what’s called the Howey Test, not named after a hypochondriac game show host but after 1946 Supreme Court Case involving the sales of…citrus fruits…, which has been used as a precedent for determining securities ever since. But as these SEC commissioners were at pains to admit, with respect to digital assets, the application of the Howey Test is not crystal clear’.
The only thing they are sure of, it seems, “is that people have questions about how to comply with the applicable laws and regulations.” Meaning it ultimately falls on the SEC “to answer those often complicated questions thoughtfully and in a timely manner.” One thing’s for sure: the Howey Test is outdated and is an obstacle to innovation. Who knows. When all is said and done, it’s very possible we’ll soon referring to the ‘Ripple Test’ in any future cases.
Overall, this is great news for Ripple Labs, because it once again puts their Fair Notice defense front and center. From the very start, they’ve claimed that they were given no prior indication that XRP could be treated as a security. The commissioners’ recent admission that essentially nobody knows how what the hell is going on could just be the smoking gun. In a youtube video for Legal Briefs, XRP enthusiast and attorney Jeremy Hogan went so far as to describe it as “a gift from the heavens”, adding that you ‘could litigate a hundred cases and never get a gift like this letter’. It certainly poses something of a headache for the SEC. And as another lawyer on social media suggested, it would be interesting to see their attempts to ‘tap dance’ around these new developments.
Well, tap dance they did. But the SEC is less Fred Astaire, more Fred Flintstone. In a counter letter of their own, they laid out 5 attempts to discredit the statement. The first two reiterated that the Commissioners’ statement did not represent the SEC as a whole and wasn’t legally binding. But the third point suggested that there is in fact a precedent here, as per the case of the SEC vs Kik Interactive, where similar comments made by, you guessed it, Commissioner Pierce, also referred to the lack of clarity from the SEC. In that case, however, the judge ruled that despite the absence of clear guidance on securities enforcement in crypto, “the law does not require the Government to reach out and warn all potential violators on an individual or industry level.”
In short, they acknowledged the comments but also chose to disregard them. But in an earlier statement from the two SEC Commissioners, they also said that although “people can study the specifics of token offerings that become the subject of enforcement actions and take clues from particular cases, applying those clues to the facts of a completely different token offering does not necessarily produce clear answers.” These comments effectively front run the SEC’s own counter narrative, since the securities status of an ICO can only be considered on a case by case basis. The onus therefore has to be on the SEC to draw up clear and robust guidelines for crypto companies. Regulatory clarity in the SEC? What an innovation.
Anyway, this puts the SEC squarely on the back foot, and next week things are set to heat up even more, with a hotly anticipated guest appearance from former SEC Director of Corporation Finance, William Hinman. His deposition will relate to comments made in 2018, in the now-legendary speech in which he stated that Ether, similarly launched in a 2014 ICO, was not a security.
Yep, it’s still on the SEC website. And they took a similarly hands-off approach at the time, disavowing his comments and claiming they didn’t represent the SEC’s views. Well, we may just find out that wasn’t strictly true. And whatever Hinman is forced to give up under oath could spell trouble for the SEC. Either way, this kind of in-fighting doesn’t bode well for them. And I’m loving it. Say what you will about XRP, you have to admit: when it comes to their contribution to the legal drama genre, their work truly is second to none.
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Outside the courtroom, there have also been some pretty big announcements on the XRP ecosystem. We recently did a video on the Flare Network, which was developed by Ripple’s Xpring accelerator program back in 2019 with a view to bringing smart contract utility to via a separate blockchain. XRP holders have been eagerly awaiting a ‘flaredrop’ of native Spark tokens since the community snapshot in December of 2020. This airdrop is expected once the Flare network goes live. However, after plans to allow the community to decide on token distribution were thrown into question by tax implications, Flare’s CEO Hugo Fillon cancelled proposals in a U-turn on Twitter. Meanwhile as XRP holders wait patiently for Sparks to fly, they now have another airdrop to look forward to – this time of SGB, the native token for the Songbird network.
Songbird is a protocol designed to be a canary network for Flare, which will provide ‘live testing on an operational blockchain in an adversarial environment’. It is essentially to XRP what Kusama is to Polkadot. And you don’t need me to tell you what a crazy run Kusama’s done this year. [Ben’s thumb down chest move].
According to the team behind it, Songbird will be critical in testing the network’s architecture along with core systems that include Time Series Oracle, the StateConnector, and F-Asset system. The idea is that the limited supply will bring value to the token, therefore making it a hot prospect for attack. As Flare describe it, this kind of testing is as “real” as it can possibly get. Which should make for the development of a truly resilient system, where dApps can be tested on Songbird in advance so any potential bugs can be identified and fixed. Flare has a lot of potential and that potential could easily translate over to XRP. I want to update my previous XRP prediction of $12 this year to $22 by 2022. As of this recording XRP is sitting at a bargain .59 cents. Do that math.
Finally, a quick word about XRP’s slightly more respectable, slightly faster but distant cousin, XDC, of the XinFin Network. Without the shadow of the SEC following them around like a bad smell, these guys have been quietly making inroads as another enterprise-focused blockchain with heavyweight potential. This hybrid blockchain was built with a view to changing the global trade and finance game, using a fast, efficient, decentralized infrastructure solution. XINFIN stands for Exchange Infinite. Powered by its native token, Xinfin Digital Contracts, or XDC, its a hybrid network that combines the transparency of public blockchains with the kind of speed and security you’d find on private networks. It achieves this using a permission-based consensus mechanism, and a public state that’s shared by all networks.
This allows enterprises to share basic data across networks with ease. Meanwhile, XDC’s private state can be used to securely transmit sensitive financial data. And with the protocol acting as a confirmation layer for cross border payments, plus the XDC token working as a settlement layer, XinFin has attracted the attention of major players like R3’s Corda. Corda is a distributed ledger platform that allows secure, interoperable communication between networks, and it has the support of some of the world’s largest banks.
With XDC now being used as a settlement token within the Corda system, this will provide a bridge to a wider range of ECR20 tokens, of which XRP would be an obvious candidate for adoption. But XDC have been making impressive headway with little to no fanfare. They’ve got a serious team unencumbered by ongoing legal disputes, and their partnership with Corda means they’ve got their foot in the door of global finance. Will there be an XDC Army forming soon? Maybe even an Air Force? Like any Dick Wolf show…I see plenty of spin-off potential.
That’s all I got. Be blessed. Bitboy out.