Ripple, the company behind XRP, has definitely positioned itself strongly in recent months as one of the most important companies for the cryptography sector and the entire scene of blockchain technologies. It may be too late to classify XRP as security.
At least this is the opinion of two independent legal experts who explained to Crypto Briefing that any acquired regulatory clarity would be far outweighed by the costs or even the negative effects it would have on the industry.
Max Rich, deputy advisor to the Republic's crowdfunding platform, thought it was unlikely that the SEC would force Ripple Labs to repay investors. He believed that the authorities would repress ICO projects based on the proposal to sell unregistered securities.
The sale of XRP tokens in mid-2013, however, seems to be excluded. After all, it happened so long ago.
Republic is an investment platform in which "everyone can invest up to $ 10" in innovative startups managed by their team. It is a community that gives power to the founders and offers everyone the opportunity to become an angel investor. Republic was founded and built by AngelList alumni who believe that angel investors are the catalysts of change in the world.
As a consultant for the Republic, Max leads companies through the crowdfunding process, coordinating the regulatory and compliance needs of the platform with the legal demands on the securities that companies must make to raise funds.
Rich said the SEC will use the DAO debacle, in the summer of 2016, as a point of reference. Projects that hosted a public sale before could be treated differently from those that occurred after that date.
"I think the SEC uses DAO as a point of inflection."
Rich thinks that previous public sales, like Ripple, could still be dealt with by the SEC. That said, they may not be the immediate goal of the regulator.
"It is likely that they are using limited resources to target bids where there are (i) principal that can be identified, (ii) funds can be traced and recovered and (iii) benefits that can be achieved for the public – a net benefit for Application, "he wrote.
The fact is that the encrypted markets are still falling. Ethereum (ETH) reached its annual minimum of $ 155, falling 37% last week. But those losses were positively bullish compared to the ERC-20 token galaxy, many of which suffered double-digit losses in just one day.
The free fall seems to be related to the announcement last Friday of the regulatory agreements by two non-compliant ICOs. Airfox (AIR) and Paragon (PRG) have both agreed to repay their investors, register their tokens as securities and pay fines to the Securities and Exchange Commission.
This was the first application of securities against token sales in the United States. Although the SEC has previously taken actions against fraudulent sales and stopped at least one ICO on its tracks, last week brought the first penalty for ICOs who did not register their tokens or requested exemptions.
While repression is not good news for anyone in the ICO space, there is some suggestion that the sell-off could be a kind of overreaction. With only a quarter of a million penalties each, Paragon and Airfox may have broken off easily, suggesting indulgence for token sellers who are willing to bend their knees.
Michael Minihan, lawyer and parter of Bx3 Capital, said he thinks the actions are appropriate:
"It was discovered that they had sold unrecorded titles, and a compliance path was provided, albeit with a penalty for non-registration, which seems to me to be a fair result, even if there is no indication of a new asset guide digital, only an additional evaluation of the market by the SEC. "
He also pointed out that XRP is highly integrated with the cryptocurrency sector and has shown that its size and its influence within the encryption would make contact difficult. Any changes in its regulatory status will have significant knock-on effects.
"The thing with XRP is almost too big to fail, too far … Basically, if you're torpedoing Ether, you're going to tank it all in. You have the ability to accumulate most of the market by doing it I think it's not what you want to do I think that whatever they are trying to do is protect investors, and by calling Ether as a security, it does not protect investors. "
The XRP was under attack to be centralized, as the currency was entirely pre-mined and is controlled by Ripple. Many other coins, like Bitcoin, do not have this problem, but there are always other ways to be considered centralized.
The fact is that Ripple now has contradictory statements regarding the company's 2013 and 2018 postings. In 2013, Ripple Labs said it had created the total XRP supply of 100 B while today the organization says otherwise. It seems that Ripple could change their position on key statements due to the fear that the SEC would consider the XRPs as titles.
For more information on the XRP currency, the Ripple company and their innovative solutions, see our fantastic guide.