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    Landmark Ripple & SEC Case Ruled Not a Security (sometimes) | Roundup

    Fri Jul 14 2023
    Ripple LawsuitToken SalesCrypto IndustryFraudulent ActivityReal World AssetsCrypto TechnologyCoinbase Wallet MessagingAndroid Integration

    Description

    A U.S. federal judge has partially sided with Ripple Labs in an SEC lawsuit alleging that Ripple issued an unregistered security offering with its XRP token. The court found that the programmatic sales on the secondary market were not an unregistered security offering, which is a huge win for Ripple. The court concluded that Ripple's institutional sales constituted the unregistered offer and sale of investment contracts in violation of section five of the securities act. However, the programmatic sale on exchanges didn't meet the requirements to be considered a security. Exchanges and projects that have done these types of sales through exchanges are among the key winners in this ruling. It is unclear whether this ruling means that Ripple is not a security, but it is one step closer to that conclusion. Exchanges play a significant role in token listings and could potentially become primary players as investment banks in the future.

    Insights

    Crypto companies favored in legal cases

    Recent cases against the SEC have seen favorable rulings for crypto companies, such as Ripple Labs.

    Real world assets gaining prominence in DeFi

    Real world assets, including physical items like watches, are becoming more important in DeFi protocols.

    Crypto technology enabling efficient capital markets

    Crypto technology is revolutionizing the finance industry by enabling more efficient capital markets and global liquidity.

    Coinbase introduces encrypted messaging on wallet

    Coinbase has added a messaging feature to its wallet, allowing users to connect directly and engage with others.

    Google Play allows earning crypto assets

    Google Play now enables users to earn crypto assets in apps and games on Android devices.

    Chapters

    1. Ripple Lawsuit
    2. Token Sales and Compliance
    3. Crypto Industry and Legal Cases
    4. Fraudulent Activity in DeFi
    5. Real World Assets in DeFi
    6. Crypto Technology and Messaging Innovation
    7. Coinbase Wallet Messaging and Google Play
    8. Android and Crypto Integration
    Summary
    Transcript

    Ripple Lawsuit

    00:00 - 07:21

    • A U.S. federal judge has partially sided with Ripple Labs in an SEC lawsuit alleging that Ripple issued an unregistered security offering with its XRP token.
    • The court found that the programmatic sales on the secondary market were not an unregistered security offering, which is a huge win for Ripple.
    • The court concluded that Ripple's institutional sales constituted the unregistered offer and sale of investment contracts in violation of section five of the securities act.
    • However, the programmatic sale on exchanges didn't meet the requirements to be considered a security.
    • Exchanges and projects that have done these types of sales through exchanges are among the key winners in this ruling.
    • It is unclear whether this ruling means that Ripple is not a security, but it is one step closer to that conclusion.
    • Exchanges play a significant role in token listings and could potentially become primary players as investment banks in the future.

    Token Sales and Compliance

    06:58 - 14:25

    • Institutional sales and OTC and direct token sales may be considered securities.
    • Tokens linked to selling block space are infrastructure tokens.
    • Tokens linked to app models are still uncertain.
    • Legal experts should comment on the impact of the news.
    • The SEC may require token issuers to go through an exchange.
    • Early stage companies may need to sell and distribute tokens properly before launching them.
    • US persons may only participate in tokens through registered license exchanges.
    • This news offers a way forward for many projects in terms of compliance.
    • Venture funds have limited options for buying tokens now, either on the open market or through reg-deep filings.
    • The ruling might push protocols to launch their tokens faster.
    • Exchanges may need broker dealer licenses or partnerships with licensed brokers.
    • Approval for a black market ETF may become more likely after this ruling.
    • Legal cases involving crypto companies seem to be favoring the companies over the SEC.

    Crypto Industry and Legal Cases

    14:03 - 21:22

    • The court has been favorably siding with crypto companies in recent cases against the SEC.
    • Coinbase's stock price has rallied and nearly doubled in the past month, driven by positive market interpretations of events like the Ripple case and potential ETF approval.
    • The Ripple case and potential ETF approval are strong signals that can quickly shift momentum in the crypto industry.
    • Celsius CEO Alex Moshinsky has been sued and charged by multiple regulatory agencies, including allegations of wire fraud and price manipulation.
    • Moshinsky's claims about being the inventor of VOIP were debunked, raising red flags about his credibility.
    • The SEC alleges that Celsius raised billions through fraudulent sales, lied to investors about financials, and manipulated the price of its native token (CEL).
    • A smart contract attack on a Solana DeFi protocol was deemed fraudulent activity for the first time by SDNY.

    Fraudulent Activity in DeFi

    20:53 - 27:56

    • A person manipulated the price of a Solana DeFi protocol and generated millions in inflated fees using fake accounts and fake price data.
    • The person leveraged flash loans to take out tens of millions in funds as liquidity in a pool.
    • The incident raises questions about the line between arbitrage opportunities and fraudulent activity.
    • The case also raises concerns about civil attacks on protocols and multiple account usage in crypto.
    • The individual's Google search history after the incident included queries related to embezzlement, wire fraud, malicious intent, and preventing asset seizure.
    • Two other notable events were the Patek Philippe NFT loan, where a watch was used as collateral for a loan, and Coinbase wallet messaging innovation.

    Real World Assets in DeFi

    27:27 - 34:42

    • 4K protocol is a physical item to NFT on-chain converter that allows the use of physical items in DeFi.
    • Real world assets make up a significant portion of stability fees generated by MakerDAO, with 80% of fees coming from real world assets.
    • The real world asset portfolio of MakerDAO is valued at 2.3 billion DAI.
    • Secondary markets for watches, such as Corona24, have high revenue and attract investments from notable figures like Cristiano Ronaldo.
    • Real world assets are expected to rise in prominence within DeFi protocols and L2 solutions.
    • New technology platforms typically gain traction by enabling previously inaccessible supply rather than bringing on existing supply.
    • Examples include Airbnb unlocking mom and pop listings, Uber and Lyft attracting demand before traditional taxis joined, and YouTube allowing anyone to publish video content before big brands came on board.
    • Finance is inefficient, and those with a background in finance appreciate the inefficiencies in accessing financial products and services through traditional channels.

    Crypto Technology and Messaging Innovation

    34:21 - 41:12

    • Finance is an antiquated and inefficient industry that hasn't caught up to the internet.
    • Crypto technology enables more efficient capital markets and global liquidity.
    • DeFi has been battle tested and can absorb shocks in the volatile crypto market.
    • To scale DeFi to trillions, a permissioned environment like L2 with KYC could be used.
    • Access to base, L2, allows for DeFi apps, token listings, and real-world assets.
    • Quicknode is a blockchain development platform that offers cost reduction and performance at scale.
    • Permissionless is a major DeFi conference offering discussions on various topics in crypto.

    Coinbase Wallet Messaging and Google Play

    40:56 - 47:45

    • Coinbase has introduced end-to-end encrypted, private, portable messaging on the Coinbase wallet.
    • The messaging feature is powered by a startup called XMTP.
    • The messaging protocol allows users to connect directly through their wallets and engage with others, including businesses and communities.
    • Users can send payments across thousands of different coins, such as USDC, without any gas fees.
    • The feature gives users full control and ownership over their chats.
    • Coinbase's messaging functionality solves the problem of interacting with Permys at Blockworks, allowing direct communication with owners of Permys.
    • Coinbase is pushing the limits of what wallets can do and expanding the functionality beyond basic transactions.
    • Messaging within wallets has the potential to explode in popularity, similar to how Venmo and Robinhood integrated finance into their messaging platforms.
    • Google Play now allows users to earn crypto assets in apps and games on Android devices.
    • This move by Google puts pressure on Apple to consider allowing crypto integration in its app store.

    Android and Crypto Integration

    47:16 - 53:21

    • Android putting pressure on Apple to allow crypto apps and services
    • Google Play product manager excited about in-app experiences and NFT rewards
    • Discussion about movie trailers being too long
    • Mr. Beast's success on YouTube and potential for a TV show
    • Discovery of popular artists through YouTube
    • Mention of scooter bran discovering Justin Bieber
    • Upcoming ECC conference mentioned
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