A consultation provided to Ripple by law firm Perkins Coie in 2012 argued that the XRP token is not a security. However, the experts noted a “small” risk that SEC investigators might disagree with this analysis.
The conclusion of these now public 2012 memos is clear: XRP “do not constitute securities.” 1/2 https://t.co/hufsu0QRs0— Stuart Alderoty (@s_alderoty) February 18, 2022
“The conclusion from the 2012 public memos is clear: XRP is “not a security.” The fact that Ripple had the foresight to seek legal advice from a well-known firm — in the absence of clear case law and five years before the SEC even talked about digital assets — is commendable,” wrote Ripple General Counsel Stuart Alderoti.
According to attorney James Filan, the leaked documents are “generally favorable” for Ripple. In the first February 2012 consultation, the lawyers stressed that if NewCoin [previously known as XRP] was distributed under an ICO-like process, the SEC would likely consider it a security.
In the same year, Ripple revised its business plan and again turned to Perkins Coie. In October, lawyers noted that XRP tokens should not be considered securities, but there is a risk that the SEC will not agree with these conclusions.
The document provided to the company also suggested measures that Ripple can take to minimize this risk.
3/5 The October memo was more positive and while it said that there was a “small” risk that the SEC could disagree, Perkins Coie concluded that Ripple Credits should not be considered securities. The memo also suggested steps Ripple could take to minimize the risk that the SEC— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) February 18, 2022
“It seems to me that Ripple acted very proactively, which is extremely important. There is nothing in these memos to suggest that the company was reckless or ignored any significant risks. In fact, the documents say otherwise - Ripple was cautious,” Filan concluded.
In an October consultation, lawyers for Perkins Coie warned the company that any initiative to promote XRP as an investment opportunity raises the risk of potential enforcement by the SEC.
“We believe that this risk can be minimized through careful marketing efforts or by obtaining a no action letter from the Commission,” the note said.
Deaton Law Firm founder John Deaton noted that it was Perkins Coie specialists who helped former SEC Corporate Finance Director William Hinman write a speech for the Yahoo Finance conference in June 2018. Then the former official said that for various reasons, Bitcoin and Ethereum are not securities. He did not mention the XRP token.
In 2015, pursuant to this binding agreement w/ the U.S. Federal Government, #XRP was declared to be “convertible virtual currency”;— John E Deaton (@JohnEDeaton1) February 19, 2022
On June 13, 2018, SEC enforcement lawyers wrote a legal memorandum 📝 analyzing whether #XRP was a security under the Howey test;
According to CoinMarketCap, amid the release of documents on February 19, the price of XRP rose by 10%, despite the negative market dynamics. At the time of writing, the asset is trading near $0.79 - quotes have corrected, but are still in the green zone.
Earlier, the Commission filed a motion with the court asking them to suppress the draft of Hinman's speech. The community speculated that the original version might have stated that XRP was not considered a security.
Recall that in December 2021, Deaton Law Firm stated that the SEC showed greater loyalty to Ethereum than to the XRP token.
In November of the same year, the Fox Business TV channel published a large-scale investigation into the SEC case against Ripple. The journalists came to the conclusion that the employees of the department behind the filing of the lawsuit could be affiliated with Ethereum.
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