The mystery behind the two sealed memos in the SEC vs Ripple lawsuit has finally been revealed. These are the legal memos that Ripple Labs Inc. received about XRP tokens ten years ago. However, the documents suggest that Ripple made an effort to prevent XRP from being legally considered a security.
What’s behind the sealed memo?
The SEC has claimed that Ripple and its members sold the virtual tokens without registering with the agency and profited about $600 million. The two memos of different dates contain the advice Perkins Coie LLP has received to Ripple about 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 terms may be subject to regulation as securities or commodities by the commission.
2/5 (I didn’t see the term ICO being used), it would probably be considered a security. But Ripple subsequently revised its business plan and went back to Perkins Coie, who issued a second memo in October 2012. This second memo was sent to Chris Larsen and Jed McCaleb.
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) February 18, 2022
While the second memo received in October 2012, suggested that XRP should not be considered a security under federal law.
Here are some key recommendations from the second memo:
Ripple Credits can become a commodity. 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. Although commonly referred to as an alternative or crypto currency, coins are unlikely to be regulated under the federal laws governing the issuance of coins. Coins are not metal coins or bars, and we understand that they are not designed to be confused with United States currency or any other carriage. These features reduce the risk of coins violating anti-counterfeiting and other currency laws
Ripple General Counsel Stuart Alderoty said in a statement that “the documents show a ‘compelling’ legal analysis Ripple received in 2012 that XRP is not a security.” Meanwhile, former federal prosecutor James K Filan has called the disclosure of the memos beneficial to Ripple.
4/5 would disagree with Perkins Coie. The memos cover the entire landscape of legal issues (not just securities issuance) and I think they show how careful Ripple was trying to be. This was also 5 years before the SEC really started talking about digital tokens.
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) February 18, 2022
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About the author
Ashish believes in decentralization and has a keen interest in evolving Blockchain technology, the 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 plays video games, watches a thriller or participates in outdoor sports. Reach me at [email protected]
This post Sealed Memos Finally Released; Is XRP a security?
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