The security vs not a security keynote has always been the elephant in the room. Regulators have been heedful and cautious whenever they’ve addressed or taken a stance in the said debate. People from the community, on the other hand, have been quite vocal about the same.
In fact, at the heart of SEC’s lawsuit against Ripple, the matter of contention remains to be the same. The agency filed a lawsuit against the blockchain payments firm back in December 2020 arguing that its native XRP tokens fell under the “security” category and not the “currency” category.
It has been alleged that Ripple and its executives sold $1.3 billion worth of XRP in an “unregistered” securities offering. Per the agency, Ripple was different because XRP was actively used to fund Ripple’s business and essentially represented an investment in the company itself.
Now, in a recent podcast appearance, Michael Saylor opined on the classification of ETH and XRP. He said,
“Ripple is an unregistered security. It is obvious. It’s a company. The company owns a bunch of it. They sell it to the general public, but they never took the company public. There are no disclosures.”
Is It All Unethical?
Saylor went on to compare XRP to Ethereum and gave the latter also the “unregistered security” tag. The Bitcoin maximalist went on to assert that pretty much all altcoins were securities, and should be subjected to SEC enforcement. He said,
“It [Ethereum] is controlled by a few people—the Ethereum Foundation and ConsenSys. Just like FTT, just like Solana.“
“I think the best thing for the world would be if the SEC pretty much shuts down all of it. It’s all unethical.“
Saylor further asserted that Bitcoin was an “ethical commodity,” while the other altcoins were just equity tokens issued by a company “in order to get around going public.” He claimed,
“They are committing securities fraud.”
Commenting on Saylor’s assertions, Anthony Sassano, Founder of The Daily Gwei, tweeted,
“Imagine calling yourself a “Bitcoin maximalist” and then calling something an “unregistered security” which is something enforced by governments/nation states Saylor is an embarrassment and is the furthest thing from a cypherpunk.”
Nevertheless, Saylor is not the only one leaning toward the security side of the spectrum. Gene Hoffman, Chief Operating Officer at blockchain company Chia Network recently asked the community to prepare for Ripple losing to the SEC. In a recent thread on Twitter, he said,
“The only outcome is that a federal judge will rule that Ripple’s sales of XRP made XRP a security.“
The Sky Is Overcast With Foggy Clouds
It is worth recalling here that regulators have claimed in the past that Ethereum is not a security. In a 2018 speech, Bill Hinman, former director of Corporation Finance, told the audience at a conference that, in his view, Ether was not a security.
CryptoLaw founder John E Deaton went on to highlight the same and tweeted:
Alongside, other community members also opined that Saylor only cared about “monopolizing” his bag and was not paying heed to innovation and evolution.
The individual offerings made by Ether and XRP, to a fair extent, have been similar in nature, and if Ether is not considered to be a security, why is XRP? In fact, additional questions with respect to what exactly it means to register still remain unanswered.
At this stage, Ripple is negotiating that for the whole industry, and until and unless its lawsuit against the SEC concludes, we will not have a definitive answer to the aforesaid questions.