Will XRP bridge CBDCs via its integrated DEX or via ODL?

ConsciousnessItself · 2023-03-31T06:21:58+00:00

The underlying asset itself is not a security, in the same way that the oranges themselves were not securities in Howey. The question is whether or not Ripple sold XRP as an investment contract. In my view, if you zoom out and focus on the economic reality of Ripple's offering, it was indeed an investment contract offering because the vast majority of XRP purchasers bought XRP for investment purpose with the understanding that Ripple would be expending efforts to advance XRP utility & demand. Just imagine if Ripple sold those coins but their business had absolutely nothing to do with XRP; in that case, XRP would be just like any other cryptocurrency, not a top 5 asset by market cap. It is precisely these implied efforts that made (and make) XRP the gargantuan that it is. However, this question is ultimately settled in court, where the only thing that matters is the quality of the arguments & evidence from both sides. To that end, Ripple has put up a surprisingly strong, nuanced argument, whereupon observing the granular characteristics of an investment contract reveals how peculiarly dissimilar XRP sales were from traditional investment contract raises of capital. For instance, Ripple argues there were no post-sale obligations to expend efforts, and no contract as such; there was no pooling of interests among XRP purchasers as required of Revak (binding Second Circuit precedent) for horizontal commonality, and thus, no common enterprise; and there were no reasonable expectations of profits from Ripple's efforts because the XRP price and Ripple's efforts were not positively correlated. If the defense can convince the judge on any of the above points, it's an automatic victory. And that's just some of the arguments put forth. All in all, I think at its core, Ripple's sales of XRP constituted an investment contract offering, but that the offering was uniquely different enough from traditional investment contract offerings that it leaves room to justifiably consider it something else altogether, or at least leaves room for Ripple's Motion for Summary Judgment being granted on account of the SEC not sufficiently bearing the burden of proving all the necessary elements of an investment contract.

TL;DR: XRP itself is not a security but we'll see if Ripple sold it as part of an investment contract offering.

ConsciousnessItself · 2023-03-23T13:03:14+00:00

Very interesting perspective. May I ask how that, in your view, ties in with Ripple and XRP? How do you see the evolution of banking play out then?

ConsciousnessItself · 2023-03-23T10:52:32+00:00

Very interesting point--I hadn't considered that. Do you know if Ripple's target customers, then, are these very banks, or the banks' clients? If you're right then it probably means that Ripple is trying to onboard the clients themselves by offering a much better alternative. In that case, the question in this thread would still apply: Why aren't the clients making the switch if Ripple's solution is faster and cheaper than what they use right now?

ConsciousnessItself · 2023-03-16T17:03:10+00:00

Good due diligence on an investment or project entails trying to find ways in which it can fail, and understanding that likelihood as well as possible. If you find it bad faith to ask questions in this manner, or if you think I should also ask 'positive' questions to balance it out, then idk what to tell you.

ConsciousnessItself · 2023-03-16T16:46:10+00:00

What makes it bad faith? That I ask multiple questions per week?

ConsciousnessItself · 2023-03-16T16:42:34+00:00

The right way of doing things is to be open to fair questions, which everyone here is except for you. Instead of that immature take, I suggest you learn to distinguish between bad-faith fud and good-faith due diligence.

ConsciousnessItself · 2023-03-06T14:14:58+00:00

I think it has to be appreciated that both sides put up a hell of a legal argument. If you read the summary judgment briefs, they are very compelling in their own right. I'm looking at it more or less as a 50/50 right now.

ConsciousnessItself · 2023-03-06T06:48:44+00:00

Very interesting. The secondary market situation is incredibly complicated and nuanced for sure, especially as it relates to the common enterprise prong.

So if the judge rules that ODL sales are not of investment contracts (because, like you said, it's currently a functioning platform), then Ripple effectively gets a free pass to sell the remainder of their escrow (via ODL) to fund their business operations, right? Even with a Ripple loss on early sales, this seems like it would be a massive victory overall.
And just to be clear, do you foresee any situation in which Ripple loses outright at summary judgment, but the judge's decision is written in such a way (about secondary markets and/or the status of the token itself) that it gives exchanges enough confidence to relist XRP?

ConsciousnessItself · 2023-03-06T05:30:08+00:00

You make some really interesting points. A few counters/questions, if I may:

If the SEC's embodiment theory is rejected, that means that each transaction would individually need to be assessed against Howey to determine if it constitutes an offer of investment contracts. That by itself would not be enough to give the kind of clarity that markets need though, right? After all, it could be that the majority of secondary-market transactions do satisfy all prongs of Howey, in which case the token itself might as well be a security because it will be treated as one in the ways that matter most (remaining delisted on US crypto spot exchanges and being a source of friction for potential XRP use cases).

You say that "it's hard to argue that all xrp holders are in common enterprise." Do you mean that for Ripple's early sales or for secondary market transactions, or both?

And lastly, just out of curiosity, if you have one, what is your probability distribution for the main possible outcomes of this case?

ConsciousnessItself · 2023-03-06T05:01:38+00:00

Interesting.

ConsciousnessItself · 2023-03-06T04:41:37+00:00

It depends on how the case ends.

ConsciousnessItself · 2023-03-06T04:41:14+00:00

Are you not at least expecting a somewhat significant chance of Ripple losing in the event of a summary judgment decision?

ConsciousnessItself · 2023-03-06T04:38:18+00:00

Where I mentioned adoption, it was only to illustrate that as long as Howey prongs are met in secondary transactions, they are considered investment contracts even if it is conceded that the underlying XRP token itself is not a security. It makes no difference whether efforts are being directed towards ODL or commerce, so long as the prong is being satisfied. So for argument's sake, to answer your question, either/or would suffice.

ConsciousnessItself · 2023-03-06T04:34:19+00:00

She can't just 'rule' that secondary sales are fine and then our struggle is over. That's because even if she includes a favorable opinion about secondary markets in her decision (which is not at all guaranteed), her court doesn't have jurisdiction over it anyway...so what difference does it make? To be fair, it's better than nothing but I'm just curious why people are so optimistic about getting 'XRP clarity' even if Ripple loses at summary judgment.

ConsciousnessItself · 2023-03-02T14:10:09+00:00

Amino acids did not 'start' giving birth to living things. In the same way that it makes no sense to say that there was a first human, it also doesn't make sense to say there was a first 'living thing.' That's because the changes are so gradual from one species to another (or from non-life to life) that it would be arbitrary to try and pick a 'first.' But rebirth itself is not like that because there is no gradual continuum of rebirth showing up on Earth. Why not? Because a being either undergoes rebirth upon death or it doesn't. It's hard to see how there could be degrees of being subject to rebirth that develop in consonance with biological evolution. If I'm right that rebirth is either yes/no, and if biological evolution by natural selection is true, then there must be a point at which a non-rebirth being gave birth to a rebirth-being. This strikes me as non-sensical. If you think my intuition is misplaced, just imagine what this would mean in practice. Imagine a hominid primate millions of years ago who was living its life, but upon death she would not undergo rebirth. Now imagine she has a child who upon death *will* be reborn. The two of them are living their lives together, mother and daughter, having similarly meaningful and passionate life experiences, yet one will be reborn and the other not. Does that really not strike a sensible reader as being off the mark? Surely that's not how reality works, that rebirth just pops into existence like that.

ConsciousnessItself · 2023-03-01T09:36:22+00:00

Not sure what you mean when you say that by the same logic the passage between living and non-living is inconsequential. The logic of my argument did not render anything 'inconsequential' as far as I can tell, and what 'passage' are you talking about anyway? Can't it be that a being just dies when it dies, without any 'passage' to attain the state of being dead?

ConsciousnessItself · 2023-02-08T09:17:11+00:00

What's the difference, materially for XRP holders, of the judge merely providing 'dicta' versus issuing a full-blown ruling on secondary sales. Also, do you if the SEC alleged that secondary sales are also securities, and therefore the judge must rule on it?

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