SEC objects to XRP holders aiding Ripple defense

July 21, 2022 Coin Telegraph

As the case against Ripple rages on, the SEC wants to see certain “friends of the court” in support of Ripple be barred from providing legal aid to the defense.

The Securities and Exchange Commission (SEC) is attempting to block XRP holders from aiding in Ripple’s defense, and prohibit attorney John E. Deaton from any further participation in proceedings.

In its official objection submitted on July 19, the regulator opposed the decision to recognize 1,746 XRP holders as "amici curiae" along with attorney John E. Deaton.

Amici (plural: amici curiae) means “friend of the court” — an individual or organization not a party to a legal case but is permitted to assist a court by providing information, expertise, or insights. In this case, in support of Ripple’s defense.

Deaton has 3,252 affidavits signed by the token holders essentially stating that they are victims of the SEC’s lawsuit against Ripple as a result of lost profits.

Holders claim in the affidavits that they either did not assume legal responsibility for purchasing XRP, they bought the tokens for utilitarian purposes instead of investment purposes, or they did not buy based on promises made by the company and its representatives.

However, in its objection to XRP holders, the commission claimed that they are attempting to operate outside of strictly legal issues. The SEC wrote:

“Movants do not propose briefing on legal issues. Instead, they wish to present arguments based on 3,252 affidavits “attesting” to certain facts.”

The commission has cited alleged threats by Deaton against former SEC Chairman Jay Clayton as reasoning to dismiss him as amicus. The SEC included a redacted letter dated June 7 to Judge Torres that cites a YouTube video from 2021 in which Deaton stated he “might have to walk over and slap the [profanity] out of former SEC Chair Jay Clayton.”

The XRP holders and Deaton as amici are required to submit a public reply to the SEC’s objection by July 25.

Ripple is a blockchain company that issues the XRP token. The SEC has alleged in an ongoing court case which started in 2020 that Ripple and its executives Brad Garlinghouse and Christian Larsen sold XRP as unregistered securities.

Deaton queries SEC's treatment of McCaleb

Meanwhile, Deaton has claimed that the SEC has been inconsistent with its application of the law against Ripple, Garlinghouse, and Larsen. In a July 19 thread on Twitter, the lawyer explained that if the SEC truly thought XRP was a security, it would have filed an injunction against Ripple and issued a cease and desist order against the two executives and Jed McCaleb from selling their tokens.

Ripple cofounder Jed McCaleb has sold nine billion XRP since leaving the company in 2014.

The SEC claims #XRP itself is a security and anyone who sells it is violating Section 5 of the Securities Act. The SEC claims @Ripple @bgarlinghouse & @chrislarsensf “enriched” themselves at the expense of investors and it is seeking $1.3B in disgorgement from these defendants. https://t.co/9nJ1iNroth
— John E Deaton (207K Followers Beware Imposters) (@JohnEDeaton1) July 18, 2022

The outcome of this case could determine whether XRP is a security. If the judge rules in favor of the SEC, it could be the precedent the commission needs to pursue legal action against other crypto projects that sold tokens similarly to Ripple.

World Economic Forum Shares a Video About Changing Bitcoin’s Code to Proof-of-Stake

April 29, 2022 Bitcoin.com

Ripple CEO: SEC Lawsuit Over XRP ‘Has Gone Exceedingly Well’

April 17, 2022 Bitcoin.com

The SEC Set Itself Up for Catastrophe in Lawsuit Against Ripple, Says Crypto Legal Expert – Here’s Why

April 16, 2022 The Daily Hodl

Greenpeace, Ripple co-founder campaigning to change Bitcoin code

March 29, 2022 Coin Telegraph

Bitcoin Miners

Chris Larsen, co-founder of Ripple also joined in on the call, saying Bitcoin is the “outlier” now that Ethereum’s model is set to change.

Greenpeace, along with other climate groups, and co-founder and executive chairman of Ripple, Chris Larsen, has launched a new campaign aimed at changing Bitcoin (BTC) to a more environmentally friendly consensus model.

The “Change the code, not the climate” campaign aims to pressure key industry leaders, Bitcoin miners, and influencers like Elon Musk, and Jack Dorsey, into moving over to a new consensus model saying:

“If only 30 people — the key miners, exchanges, and core developers who build and contribute to Bitcoin’s code — agreed to reinvent proof-of-work mining or move to a low-energy protocol, Bitcoin would stop polluting the planet.”

Greenpeace cites concerns that the energy required to mine Bitcoin comes mostly from fossil fuels, and that miners are using coal waste and associated natural gas as ways to fuel their operations.

Greenpeace accepted Bitcoin donations for seven years between 2014 and May 2021 before announcing it was halting acceptance of Bitcoin donations, citing environmental concerns. Around the same time, Tesla CEO Elon Musk stopped accepting Bitcoin payments for Tesla vehicles also.

Ethereum (ETH), which currently relies on the same proof-of-work mechanism as Bitcoin, is in the final stages of a lengthy and complicated process to a new proof-of-stake mechanism. Greenpeace says proof-of-stake is much less environmentally harmful due to its lower energy consumption.

“Now with Ethereum changing, Bitcoin really is the outlier,” Larsen said to Bloomberg in an interview published on March 29. “Some of the newer protocols, Solana and Cardano are built on low energy,” he added.

Larsen stated he owns Bitcoin and Ethereum and wanted to see both cryptocurrencies succeed, but that Bitcoin is heading down an unsustainable path. He added that if he had concerns about Bitcoin as competition for Ripple, he would let it continue.

Some of the largest Bitcoin mining companies hold in excess of 5,000 BTC, upward of $237 million at current prices, and data shows that those with the most Bitcoin reserves are increasing their hash rate.

Greenpeace does note this in its manifesto, saying they understand Bitcoin stakeholders have an incentive not to change, as changing Bitcoin would make their expensive equipment much less valuable, meaning sunk costs or “other creative solutions” would have to be implemented.

Chris Bendiksen, a Bitcoin researcher at CoinShares was quoted in the report saying:

“I’d put the chance of Bitcoin ever moving to PoS at exactly 0%. There is no appetite among Bitcoiners to destroy the security of the protocol by making such a move.”

Greenpeace did not immediately respond to a request for comment.

Ripple chair’s pay-off plan to convince BTC miners to adopt Proof of Stake

December 10, 2021 Coin Telegraph

Bitcoin

Billionaire Chris Larsen said that miners should view the move away from PoW as “a net positive for their longevity.”

Executive Chairman and Co-founder of Ripple Chris Larsen has unveiled his plan for Bitcoin miners to move away from Proof of Work (PoW), saying they should view it as “a net positive for their longevity.”

He argues it could provide a major boost to the share prices of listed mining firms “as any new code proposal would almost certainly have to include lucrative incentives to gain their support.”

PoW is the consensus algorithm that secures Bitcoin (BTC) transactions on the blockchain. While the Bitcoin network is the most secure and reliable, the amount of energy BTC mining requires causes endless debate in the crypto space. In a Nov. 10 blog post Larsen wrote:

“The emerging solution among climate experts is that Bitcoin’s code needs to be changed to a low energy consensus algorithm like those used by nearly all other major crypto protocols. For example, while Bitcoin uses the energy of approximately 12 million US homes per year, other methods could drive that to fewer than 100 US homes.”

Ethereum is already halfway through the switch to Proof of Stake. While Larsen said this would make Bitcoin an “outlier” he concedes that any similar change would be opposed by most Bitcoin mining companies.

However he’s proposed a solution to fairly distribute the “900 Bitcoin per day” from block rewards and the “approximately 2.1 million additional Bitcoin are to be distributed through the year 2140.”

He suggests that the “least disruptive” solution to BTC’s energy problem is to “take a snapshot of the current hash rate of existing miners and then reward miners on a pro-rata hash power basis.”

“Existing miners would simply have rights to future Bitcoin rewards without the need to expend additional energy or make additional investments in mining rigs.”

The billionaire businessman explained that his plan would give miners “additional economic benefit” and “lucrative gains” because they would gain the same revenue with less operating costs going towards their power bills.

He suggested the “future rewards [...] could be held and tokenized,” concluding that “while the process to enact these plans with consensus across the Bitcoin community will take time, the benefits far outweigh the risks.”

“These assets could be extremely lucrative to existing miners, especially as Bitcoin goes from its current climate disaster status to a truly green financial technology of the future.”

Larsen specifically referenced several U.S. mining stocks including Stronghold Digital Mining (SDIG), Hive Blockchain Technologies (HIVE), Canaan (CAN), Riot Blockchain (RIOT), BIT Mining (BTCM), Bit Digital (BTBT), Bitfarms (BITF), and Marathon Digital Mining (MARA).

Needless to say, the proposals are unlikely to be welcomed by Bitcoiners — or miners who have ambitious plans to increase their share of the hashrate and would miss out on additional revenue through this plan.

Ripple seeks docs from 15 offshore exchanges it says could be ‘fatal’ to the SEC’s charges

June 3, 2021 Coin Telegraph

Brad Garlinghouse

Ripple believes records held by offshore exchanges will prove its executives did not violate Section 5 of the Securities Act by offloading XRP on the U.S. public.

Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, have filed a motion requesting the U.S. Securities and Exchange Commission investigate Bitfinex’s parent company, iFinex, and 14 other international crypto exchanges.

The June 2 motion requests documents from exchanges including iFinex, Bitforex, Bithumb, Bitlish, BitMart, AscendEX (formerly Bitmax), Bitrue Singapore, Bitstamp, Coinbene, HitBTC, Huobi Global, Korbit, OKEx, Upbit Singapore, and ZB Network Technology

The motion’s supporting memorandum notes the letters of request solicit assistance from authorities in the Cayman Islands, Hong Kong, South Korea, the United Kingdom, Singapore, Seychelles, and Malta.

The SEC’s amended complaint against Ripple accuses Garlinghouse and Larsen of selling more than two billion units of XRP to “public investors” located “all over the world,” with the SEC seeking disgorgement from Ripple’s executives based on the sales.

Ripple’s executives deny the SEC’s allegations they violated Section 5 of the 1933 Securities Act, emphasizing that Section 5 specifically prohibits the domestic sale of securities without a registration statement. Garlinghouse and Larsen’s legal representation counter that their XRP sales were conducted on foreign exchanges and thus outside of the SEC’s jurisdiction:

“In the case of transactions conducted on such foreign trading platforms, both the offers of XRP and the sales of XRP occurred on the books and records of the respective platforms, and therefore geographically outside the United States. The SEC’s failure to allege domestic offers and sales should be fatal to its claims.”

Ripple asserts the exchanges and related entities subject to its new motion “possess unique documents and information” regarding Ripple’s legal battle with the SEC, specifically concerning “the process by which transactions in XRP allegedly conducted by the Individual Defendants on foreign digital asset trading platforms were conducted.”

The SEC amended its complaint against Ripple and the firm’s executives in February, alleging their sales of XRP suppressed the crypto asset’s price. The complaint also accuses Garlinghouse and Larsen of misleading public investors while offloading billions of dollars worth of XRP as Garlinghouse repeatedly claimed he was “very long” on XRP during the time of the alleged sales.

The filing comes just days after a significant blow was dealt to the SEC’s case against Fipple, with the court rejecting the SEC’s bid to access communications between Ripple and its legal counsel.

chris larsen