XRP is under attack from the US government.
The United States Securities and Exchange Commission is alleging that the XRP token sale by Ripple Labs in 2013 was illegal
due to the fact they should have registered XRP as a security.
The Ripple Labs team holds out that the token sale was not illegal and XRP is not a security.
Ripple is holding strong that XRP is, in fact, a utility and should never have been registered as a security
since it isn’t one.
This case has tons of implications in the world of crypto
that will have resounding and reverberating effects on the entire market for years to come.
Today, we are going to look at what this case is
and why it is so incredibly important to the landscape of crypto,
and more importantly, what other types of coins could be in the crosshairs of the SEC after XRP.
Find out whether you should be preparing for crypto Armageddon.
Let's get it!
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Welcome to BitBoy Crypto!
My name is Ben.
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In this video, we're going to be taking a look at some of the major details of the XRP-SEC lawsuit,
including what triggered this,
how other coins have fared against the SEC,
the possible outcomes,
and what types of coins could be next.
You definitely want to watch this entire video
to see if coins in your portfolio might be up for execution following XRP.
So, first and foremost, I want to establish a few things.
I have held big chunks of XRP in my portfolio at certain times,
but I feel like I've been fair to the crypto community regarding Ripple.
I've advocated for it as an investment and have been hard on it for its attributes
that make many people call it the "banker coin".
So this video is objective towards XRP and Ripple Labs.
Many people commenting and making videos on this situation have agendas at play.
Many people are overextended into XRP, meaning they are biased to see a favorable conclusion.
Other people have wanted XRP to fail for a long time,
so they can't see past their own hate.
I own no XRP at this moment and wish no ill will toward any investors of XRP.
I made a lot of money on XRP in 2017,
but I have obviously been disappointed with its performance in the bear market,
as even when other projects got pumps, XRP seemed to just stand still.
But I was very encouraged by its recent pumps and expected XRP to recover and have a great bull market.
And if you think for one second, this was not a coordinated attack on Ripple by the SEC,
then you have another thing coming.
One thing we know for sure is that the SEC is vindictive and will destroy you
if you stand against them.
And this should concern those still dedicated to the XRP Army.
Brad Garlinghouse and the Ripple Labs team have been adamant
that they will use their giant team of lawyers and giant supply of money to fight the SEC to the nail.
If they do this, it will end in travesty and sorrow for all XRP investors.
XRP will be rendered worthless and untradable,
destroyed far beyond what we've just seen
when it got decreases in price based on Coinbase and Crypto.com delistings.
They both are halting XRP trading on their platforms as of January 19, 2021.
But let's look at exactly what the SEC is alleging because it may offer some clues
as to what types of coins they will seek to go after in the future.
There are basically two aspects to this lawsuit.
The first we've talked about because it's pretty obvious.
The claim by the SEC is that Ripple had a token sale in 2013 that was illegal
because the XRP token was not listed as a security with the SEC.
A security was defined in the Securities Act of 1933.
But the long and the short of it is that security is something that someone sees purely as an investment they give someone
or a business money
and expect a return on that money.
The government uses something known as the "Howey Test"
to determine whether something fits the qualities of a security or not.
This is why the distinction between a security and a utility is so important.
I look at it like this.
A security in crypto would be a coin that people invest in via private sales or seed rounds
that doesn't really "do" anything.
The value of the coin is basically just to give ROI to investors.
We've certainly seen many of these in cryptocurrency.
A utility though means that someone is investing in a product,
like someone invest in Chainlink because they truly believe
they will see massive returns based on the success of the Oracle Technology that backs LINK.
Because eventually the product will be worth more money,
investors will make more money.
But even for coins that could fall into the security category,
there's more than meets the eye when it comes to regulation
because not only would the coin have to fit the category of a security,
but there also must be someone to go after.
You see, Bitcoin and Ethereum have officially been deemed and classified by the SEC as not securities.
However, Ethereum probably fits the description of a security in its outset.
It had a token sale.
But the Ethereum network has grown so large, and it's so decentralized
that there's nobody to really go after.
It's basically grandfathered in.
Where with XRP, there is a centralized company, Ripple Labs, backing it.
And this is where the true test of the centralization of XRP comes into play.
The SEC is not only alleging that XRP is a security,
but also alleging that the leaders of Ripple,
CEO Brad Garlinghouse and co-founder Chris Larsen,
basically manipulated the price by dumping tons of XRP whenever it pumped.
Between the two of them,
they allegedly made $600 million in cash--
and that's important--
by selling their XRP throughout the last 7 years.
They've admitted to selling XRP to keep the company profitable.
But a personal selling of XRP by dominant holders who were the same people who launched the coin
is a big problem for Ripple.
And this is something to keep an eye out
when it comes to other projects the SEC could go after.
The centralization, the number one thing that the XRP haters attack,
could end up being the very thing that does Ripple in.
Before we look at the possible outcomes,
let's examine how other projects have fared against the SEC.
There are several digital currency cases by the SEC.
You can actually find the entire list of them on the SEC website.
Securities and Exchange Commission has gone after undisclosed promoters such as DJ Khaled,
Steven Seagal, Floyd Mayweather, and, the latest case, John McAfee.
That's why we always disclose on this channel 100% of the time when we have done promotions.
The SEC is also going after several scam projects that were basically Ponzi schemes
designed to benefit the founders, such as Veritaseum, Centra and Paragon.
But the ones we should look at specifically here that seem to match with the Ripple Labs' case
is Tezos, EOS, Telegram and Kik.
And what you will find is a distinction in the way these companies cooperated with the SEC.
Tezos didn't technically face off against the SEC.
Tezos, going by the ticker XTZ, was hit by a class action lawsuit alleging it was a security.
Tezos worked to settle the lawsuit and paid the $25 million out to investors.
This lawsuit settlement helped Tezos to avoid larger SEC action.
Basically, they admitted fault, faced restitution by paying back investors in the lawsuit.
Ripple, faced with a similar class action lawsuit, has fought tooth and nail to get the suit dismissed
instead of just settling.
This could have ended up contributing to the SEC lawsuit.
Now, Ripple faces a double whammy because if they lose the SEC lawsuit,
they will pretty much be guaranteed to lose the class action lawsuit due to precedent.
Scary stuff for Ripple financially.
You wonder what would have happened if they would have just settled it a year ago.
But the bold and brazen attitude of Ripple Labs against their SEC overlords
seems to be one of the very things that's put them in their crosshairs.
Block.one who's behind EOS also faced a harsh SEC lawsuit.
Rather than fighting, they immediately caved and settled with the SEC,
paying out a measly $24 million.
Now, that may sound like a lot to you or me,
but they raised $4 billion. It was a drop in the bucket.
They played by the SEC's rules and got a slap on the wrist.
Good times.
Now, they're home free with the SEC.
But two other projects,
the TON token sale by messaging giant Telegram and the Kin token from fellow messaging app Kik,
both essentially faced execution by the SEC.
They did not play nice.
Instead, they went hard at the SEC with big lawyers and harsh accusations.
How did that work out for you, guys?
You see,
fighting the SEC is like when my kid comes to me and says he refuses to take his punishment for misbehaving.
I can see it now.
Dad, you're wrong.
I did, in fact, stay up watching TV too late,
but the ground rules were not laid out properly,
so even though you said I can't play video games for a week
and put the PS5 on a shelf that I can't even reach,
I'm going to go ahead and play it anyways.
And by the way, Dad?
I hate you and you're a terrible father for even suggesting I be punished.
How do you think that is going to work out for my son in that case?
He could have some valid points,
but I guarantee he's going to be in bigger trouble for coming at me like that.
And the SEC believes it's your daddy.
And Ripple is claiming they ain't got no daddy.
But eventually they're going to find out who they are dealing with.
Here's the fact.
If Ripple Labs fights the SEC, they will get crushed.
You can't beat the government when they make the rules.
Fair or unfair, that's the way that it is.
Ripple is saying that they will fight as hard as they can against the SEC.
If they do that, XRP will certainly face the death penalty.
Investors will get crushed as XRP will be deemed an untradable security.
Now, Coinbase paused XRP trading.
They didn't kill it.
So the big platforms could be preparing to unpause trading instead of a total delisting
in case Ripple doesn't get the death penalty from the SEC.
But if they do, it's absolutely over.
Keep in mind though,
people in Ripple aren't dumb.
And surely they aren't as delusional as many people think that they are.
This could all be posturing.
And behind the scenes, they could be preparing for a settlement deal.
This is their only choice and reality.
There's virtually no chance they will win against the SEC.
No one does.
And they can't risk that.
So a settlement deal that includes payouts to angry investors and a fine due to the government
is the most likely scenario.
But the question is,
will this destroy XRP's chance to moon in the bull run?
Seems very likely.
Which could be exactly why the vindictive SEC is going directly at Ripple during this time,
to keep Garlinghouse and Larsen from selling the top for personal gain again.
So, where does this leave investors and other coins?
What other coins will the SEC come after?
After going through all of this very thoroughly,
I would say you should apply this test to your project.
Four questions to ask yourself.
No. 1: Could there be a case made that your coin is security instead of utility token?
No. 2: Is your project centralized?
No. 3: Was there a token sale?
No. 4:
Is there one person or a small group of people who benefitted greatly on a personal financial level
from the token sale that was not simply regular investors?
Basically a founder or a team.
If you answer "yes" to all four of those questions,
then you need to be aware your project can be pursued by the SEC.
And seeing the dramatic dump from XRP, you can assume any project the SEC goes after
now will face delistings and crazy selling action.
But let me know down below which coins do you think will be next to face action from the SEC?
If you want me to do a video where you want me to name specific coins
and the possibility that they face action from the SEC,
then drop me a comment down below, and we'll consider doing that video.
Let me know which coins also you want me to give my opinion on.
That's all I got.
Be blessed.
BitBoy out.