Earlier this week, the pseudonymous host of popular crypto market commentary show Coin Bureau shared his latest thoughts on XRP.
According to a report by The Daily Hodl published on July 21, here is what the Coin Bureau had to say about XRP in YouTube video released on July 18:
“A couple of other stories also caught my eye, one relevant to XRP holders. Apparently, Jed McCaleb has finally finished selling all his XRP.
“For those of you unfamiliar, Jed McCaleb was one of the original founders of Ripple. He left a few years ago to co-found Stellar, which is obviously a rival platform to Ripple. A big bone of contention since then has been Jed’s allocation of XRP. He was allocated around 9 billion coins, which is over 18.5% of XRP’s total supply and he’s basically been selling it off.
“He’s been kind of under an agreement with Ripple not to dump it all at one point, but he has basically been selling it off over the last few years, and apparently, he has finally finished doing that. No XRP has pumped along with the rest of the market, not massively because we are still in a bear market, like it or not, but this is certainly good news for XRP in the long term...
“Also, of course, coupled with the good news that XRP had last week when it scored a big victory in its case against the SEC. That case is still ongoing, it’s not going to be resolved anytime soon, but this is two really good bits of good news for both Ripple and XRP holders.“
With regard to the second piece of news he mentioned, as you may remember, on 22 December 2020, the U.S. Securities and Exchange Commission (SEC) announced that it had “filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.” Essentially, the SEC is arguing that XRP is a security under U.S. federal securities laws.
On July 12, Sarah Netburn, a U.S. Magistrate Judge for the U.S. District Court for the Southern District of New York, denied an important motion by the SEC in their lawsuit against Ripple.
In its letter motion, the SEC argued that “internal documents” related to June 2018 speech by William Hinman are protected by “attorney – client privilege”.
On 14 June 2018, William Hinman, then director of the Division of Corporation Finance at the SEC, made a speech at Yahoo Finance’s “All Markets Summit: Crypto” one-day event in San Francisco, California. The speech was about how the SEC plans to use the “Howey Test” to determine whether a digital asset should be considered a security or not. The only two cryptocurrencies Hinman mentioned by name were Bitcoin (BTC) and Ether (ETH), neither of which he said should be considered as securities:
“And so, when I look at Bitcoin today, I do not see a central third party whose efforts are a key determining factor in the enterprise. The network on which Bitcoin functions is operational and appears to have been decentralized for some time, perhaps from inception. Applying the disclosure regime of the federal securities laws to the offer and resale of Bitcoin would seem to add little value.
“And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.“
This is what Magistrate Judge Hon. Sarah Netburn said about the attorney-client relationship in her ruling:
“Defendants argue that Hinman is not a ‘client’ of the SEC’s lawyers for purposes of advice related to an outside activity such as the Speech. The SEC retorts that the Speech had to have been developed as part of Hinman’s official duties because the SEC staff who provided edits and feedback to the Speech were prohibited from using agency time and resources to provide input on a ‘purely personal errand.’ …
“At oral argument, the SEC emphasized that the information Hinman received from SEC staff while drafting and editing the Speech would not have been available to him as a private citizen; it was only in the context of his employment that he was able to solicit the edits and feedback he did.
“This question is made unnecessarily complicated by the SEC’ s litigation tactics . The SEC has distanced itself from the Speech to avoid discovery and sought to preclude Hinman’s deposition on the grounds that whatever he said in the Speech, it had nothing to do with the SEC’s position.
“The hypocrisy in arguing to the Court, on the one hand, that the Speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency, and on the other hand, that Hinman sought and obtained legal advice from SEC counsel in drafting his Speech, suggests that the SEC is adopting its litigation positions to further its desired goal, and not out of a faithful allegiance to the law.
“The Court, however, need not resolve whether Hinman was a ‘client’ of the SEC lawyers because the evidence establishes that the predominant purpose of the communications was not to provide legal advice.“