If XRP is finally identified as a security, a high probability will be banned from sales, Ripple will also face a fine for the sky, and the entire cryptocurrency market will face turmoil.
On August 14, 2019, a group of XRP investors filed a new lawsuit against Ripple on August 5. In May 2018, XRP investors filed a class action lawsuit against cryptocurrency company Ripple, claiming that the company violated state and federal securities laws. Investors believe that there is a direct correlation between Ripple and XRP. At the same time, according to the Howey test, XRP involves investment and has reasonable profit expectations and should be considered securities. At the time, Ripple's corporate media head Tom Channick denied this view. He said that whether XRP is a securities is determined by the US Securities and Exchange Commission (SEC), but we still believe that XRP should not be classified as securities.
It is reported that the lawsuit update on August 5 is an important supplement to the May 2018 lawsuit. Investors believe that whether XRP is defined as securities should refer to the SEC's “Digital Asset Investment Contract Analysis Framework”, which was just released in April 2019. Although the framework is only a non-legal framework, the court should rely on the framework. The results of the Howey test mentioned are an important reference.
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The criteria for the Howey test:
(1) This is a money investment; (the court and the SEC's definition of “money” is not limited to legal currency, and all objects that are widely considered to contain embedded value are considered to be money. Especially in The DAO token case Among them, ETH and other related crypto tokens are also considered money in Howey Test.)
(2) This investment is expected to generate profits in the future;
(3) These profits come from the efforts of the issuer or a third party;
(4) This investment is for a specific enterprise (common enterprise, which can be extended to be interpreted as a project);
Investors say that buying XRP requires Bitcoin or Ethereum, while XRP buyers invest in a common company, XRP investors have reasonable expectations of profits, and XRP success requires Ripple and others' efforts, completely Meet the above criteria.
In addition to requesting the court to refer to the Digital Asset Investment Contract Analysis Framework, the supplement also proposes that Ripple violates California's false advertising and unfair competition laws by adopting fraudulent statements about the origin of the XRP and the circulation of supplies.
Finally, the investor asked the court to support the lawsuit as a collective act and determined that the XRP was a security. The defendant violated the applicable law without registering the XRP and awarded the plaintiff and other members damages.
It is worth noting that some foreign media said that with reference to Kik Interactive's response to the Securities and Exchange Commission, from August 5th, Ripple must respond to the above questions within 45 days (before September 19).
According to Coinmarketcap data, XRP ranks third in the cryptocurrency market capitalization list, second only to Bitcoin and Ethereum. The total market value reached US$12.6 billion, accounting for 4.4% of the total market value of the entire cryptocurrency market. If XRP is finally identified as a security, a high probability will be banned from sales, Ripple will also face a fine for the sky, and the entire cryptocurrency market will face turmoil.
Source: Financial Network · Chain Finance