XRP Vs SEC: Sealed Memos Finally Released; Is XRP A Security?

By Ashish Kumar
February 19, 2022 Updated February 19, 2022
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The mystery hidden behind the two sealed memos in the SEC vs Ripple Lawsuit has finally been revealed. These are the legal memos Ripple Labs Inc. received a decade ago about XRP tokens. However, the documents suggest that Ripple made efforts to avoid XRP from being considered as a security under the law.

What’s behind the sealed memo?

The SEC has alleged that Ripple and its members have sold the virtual tokens without registering with the agency and have been profited about $600 million. The two memos from different dates include the advice received to the Ripple by Perkins Coie LLP over the nature of the coin.

Memo received in February 2012 from Perkins Coie LLP attorneys to Ripple advised the company not to sell the proposed token as various conditions may subject them to being regulated as securities or commodities by the commission.

While, the second memo received in October 2012, suggested that XRP may not be considered as a security under federal law.

Here are some main recommendations from the second memo:

  • Ripple Credits may become commodities. If people develop contracts for future delivery of Ripple Credits, they will likely be considered commodities under the Commodities Exchange Act. Futures contracts for Ripple Credits, if developed, will be subject to regulation and enforcement by the Commodity Futures Trading Commission
  • Coins are unlikely to be regulated under counterfeiting laws. While commonly referred to as an alternative or crypto “currency,” it is unlikely that Coins will be regulated under the federal laws regulating the issuance of coinage. Coins will not be metal coins or bars, and, we understand, will not be designed to be confused with currency of the United States or any other cow1try. These characteristics will reduce the risk of Coins violating anti-counterfeiting and other currency laws

Ripple General Counsel Stuart Alderoty has said in a statement that “The documents show a ‘compelling’ legal analysis that Ripple received in 2012 that XRP is not a security.” Meanwhile, former federal prosecutor James K Filan has termed revealing of the memos favorable to Ripple.

Ashish believes in Decentralisation and has a keen interest in evolving Blockchain technology, Cryptocurrency ecosystem, and NFTs. He aims to create awareness around the growing Crypto industry through his writings and analysis. When he is not writing, he is playing video games, watching some thriller movie, or is out for some outdoor sports. Reach me at [email protected]
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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