In 2012, lawyers told Ripple that XRP did not exhibit characteristics of a security

In consultations provided by Ripple’s law firm Perkins Coie in 2012, it was asserted that the XRP token is not a security. However, experts noted a ‘small’ risk that investigators at the SEC could disagree with this analysis.

The fact that Ripple had the foresight to seek legal advice from a prominent firm in 2012 – in the absence of clear case law and 5 years before the SEC even started talking about digital assets – should be applauded. 2/2

— Stuart Alderoty (@s_alderoty) February 18, 2022

«Вывод из обнародованных записок 2012 года ясен: XRP “не являются ценными бумагами”. Тот факт, что у Ripple хватило дальновидности обратиться за юридической консультацией к известной фирме — в отсутствие четкого прецедентного права и за пять лет до того, как SEC вообще заговорила о цифровых активах, — заслуживает уважения», — написал главный юрисконсульт Ripple Стюарт Альдероти.

According to attorney James Filan, the released documents are ‘generally favorable’ to Ripple. In the February 2012 memo, the lawyers stressed that if NewCoin [the XRP’s earlier name] were distributed under an ICO-like process, the SEC would likely consider it a security.

In the same year, Ripple revised its business plan and again turned to Perkins Coie. In October, the lawyers noted that the XRP tokens should not be considered securities, but there was a risk that the SEC would not agree with these conclusions.

The document provided to the company also proposed measures Ripple could take to minimise this risk.

4/5 would disagree with Perkins Coie. The memos cover the full landscape of legal issues (not just the issue of securities) and I think show how careful Ripple was trying to be. Also, this was 5 years before the SEC really even started talking about digital tokens.

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) February 18, 2022

«I think Ripple acted very proactively, which is crucial. There is nothing in these notes to suggest the company acted recklessly or ignored material risks. In fact, the documents say the opposite — Ripple exercised caution», — concluded Filan.

In October, the lawyers warned that any initiatives to promote XRP as an investment opportunity would heighten the risk of enforcement action by the SEC.

«We believe this risk can be minimised with careful marketing efforts or by obtaining a no-action letter from the Commission», — says the memo.

John Deaton, founder of the Deaton Law Firm, noted that it was Perkins Coie specialists who helped former SEC Director of Corporate Finance William Hinman draft a speech for a Yahoo Finance conference in June 2018. At that event, the former official said that Bitcoin and Ethereum were not securities for various reasons. He did not mention the XRP token.

After conducting this in-depth legal analysis of #XRP, the SEC enforcement staff DID NOT recommend filing an enforcement action against Ripple;

The next day, on June 14, 2018, Bill Hinman delivered the #Ether Free Pass Speech that Lowell Ness of Perkins Coie helped write ✍️;

— John E Deaton (@JohnEDeaton1) February 19, 2022

According to CoinGecko, in the wake of the documents’ publication on February 19, XRP’s price rose by about 10%, despite negative market momentum. At the time of writing, the asset traded near $0.79 — quotes had pulled back, but remained in positive territory.

Earlier, the Commission filed a motion with the court to seal Hinman’s speech draft. The community speculated that in its initial version it might have stated that XRP was not regarded as a security.

In December 2021, Deaton Law Firm said that the SEC showed greater leniency toward Ethereum than toward the XRP token.

In November of the same year, Fox Business published a major investigation into the SEC’s case against Ripple. Journalists concluded that those behind filing the suit could have been affiliated with Ethereum.

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