Will the SEC cripple Ripple? What does this signify to coins deemed not a security, such as Bitcoin, Ethereum…and Kin?
SEC files lawsuit against Ripple and two executives, alleging the firm brought in over $1.3 billion…
The Securities and Exchange Commission has filed a lawsuit against Ripple, CEO Brad Garlinghouse and co-founder Chris…
Since the SEC lawsuit against Ripple, the XRP token has taken a big hit, down to $.20 from $.66 in a month, a 68% drop. The last time XRP was this low was 6 months ago, July 2020.
Meanwhile, KIN, a token whose creator Kik Interactive has just settled with the SEC, has gone up over 1,792% in the past year.
Some see similarities between the two cases, others differences. The XRP Army is more likely seeing similarities, as a win for KIK must mean a win for Ripple. XRP is a token that helps transmit value, same as Kin, so XRP must win the case, right? Every drop in XRP is just a buying opportunity, in that case.
Some differences are that the Chris Larsen and Brad Garlinghouse, Founder and CEO respectively, are also being targeted in the suit. The SEC never targeted Kik CEO Ted Livingston, nor one of KIN’s main investors Fred Wilson.
Maybe it’s because, unlike Ted or Fred, Chris Larsen and Brad Garlinghouse of Ripple profited to the tune of $600 million dollars by selling XRP.
A token with questionable value and usage, mostly in interminable “Trial” tests rather than aiding in everyday transactions by, say, a Fortune 500 company.
Imagine a company that didn’t have any of the obligations of other public companies. Not having the burden of quarterly reports; communication obligations in a regulated manner so that no one could trade on material information not available to the investing community.
No oversight by the SEC.
You would have the freedom that you would want in driving a narrative that only shows your product in a positive light, and the ability to strike down any criticism as “inaccurate” FUD, protected by a curtain of opacity that no oversight affords.
Along with that a rabid XRP Army willing and able to take down anyone on Social Media with a hint of criticism against XRP.
All the while selling XRPs like they’re going out of style.
Kin, on the other hand, also gives out incentives, helping developers monetize their apps with the Kin Rewards Engine (KRE), but unlike Ripple, these apps are fully operational, no “Trials” or “Proof of Concepts”.
And ever since the case with the SEC settled, KIN’s price has shot up.
From $0.00000455 on the date of the settlement: Oct 20th, 2020, to a high of $0.00007748 on Dec 23rd, 2020, a 16x increase in price.
And that without a major App, or Major exchange listing.
The SEC fined Kik $5M, just 5% of the $100M they got in the ICO, and agreeing that KIN was not a security, free for listing on major exchanges.
One would be forgiven for thinking this Kin lawsuit was only a trial run for the SEC case against a much bigger prize: Ripple.
Follow the Money
MoneyGram is the crown jewel of Ripple’s partners, saying that they use the XRapid product in their cross-border transaction business. Yet, MoneyGram also accepted $50 million from Ripple — for what exactly?
Interestingly, Western Union saw zero advantage in using any of Ripple’s offerings, walking away after a brief experiment.
Same business. One accepts $50M and says they are a partner. The other company walks away and gets nothing. The $50 million goes a long way to explain why MoneyGram took the bait. But if XRP is so great, and saves so much money, why did Western Union walk away?
Selling Something You Don’t Need
When you take a closer look at Ripple’s partnerships and integrations, one is confronted by “Trials” and “Proof of Concepts.”
At a company I used to work for we offered trials as a way to try to convince other companies of our “value proposition.” Another way of saying it is that we were trying to sell something that no one really needed.
“Trials” and “Proof of Concepts”, with differing levels of support, both monetary and otherwise, makes a no-seller product look incrementally better on paper. Being able to list Fortune 500 companies as “Partners” looked impressive, when really they were nothing of the sort. They were just worn down by your sales talk, and just capitulated, saying “okay, go ahead, just don’t break anything.”
The previous company I worked for, like Ripple, also listed Bank of America as a “partner”. Sure, BofA proof-of-concepted our product — they do this all the time. They are quite aware that other companies will incentivize, aka offer free stuff, in exchange for using BofA as a so-called “partner.”
And what we were offering at my previous company could be described as “Not much.” We offered a local search product to BofA, when we knew they knew that when people searched for say “Louisiana” when attached to “Bank of America” they’d get to the BofA website — every single time.
That could be the situation with XRP — No “there” there. BofA is a great headline, but how much BofA uses XRP is up for debate.
Cross-border payments already exist. A mechanism — SWIFT, exists and works. The argument is that since XRP makes transactions faster and less expensive it would be a shoe-in as the next greatest thing.
But large institutions like governments and large companies like BofA using SWIFT are not necessarily motivated by faster and less expensive. Their main concerns are safety and surety.
And SWIFT has been doing that just fine for decades.
No Regulators, No Regulations
Ripple thinks XRP is a currency, not a security, so therefore not within the purview of the SEC. Yet Ripple is a company that works with other companies, that raised money in an ICO, similar to an IPO, yet without the burdensome oversight an IPO is accompanied by.
Both MoneyGram and Western Union already do cross border money transfers. They also have public facing stock, and are accountable to the SEC. Why did Ripple choose a different path?
Maybe because it’s easier.
Sell a bunch of dubiously useful tokens, brand them “crypto,” and enrich the founder and CEO without the burden of being accountable to shareholders or the SEC— a C-suite wet dream! Drive the narrative of better, faster, cheaper, all the while selling XRP out the backdoor.
Heck, Jed McCaleb, one of the former founders of Ripple, sells as much as he has legally agreed he can, going limit up on a monthly basis.
He’d sell more if he could.
Jed went on to create Stellar, a similar project to XRP, but ostensibly for the third world.
If XRP is so great, then why are the founders and CEO selling it as if it’s worthless?
Maybe because it is.
Nothing in this article is to be construed as investment advice. Neither the author nor the publication takes any responsibility or liability for any investments, profits or losses you may incur as a result of this information. Opinion piece written for entertainment purposes.