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Aaron Greenspan
The fundamental flaw in Judge Torres's reasoning regarding the Programmatic Sales portion of her ruling seems to be A) that she is interpreting Howey's third prong, that an investor "is led to expect profits solely from the efforts of the promoter or a third party" (on page 11 of the ruling) to mean that the profit has to be based on the work on the *specific* promoter of the security, in this case, Ripple. That's not what it says.
In this case, the third party (or in reality, many parties) would be everyone else buying the tokens. That's because cryptocurrency is a giant Ponzi scheme. With no inherent value, everything rests on Greater Fool theory, i.e. you hope that someone else is foolish enough to pay more for the worthless token than you did. So investors absolutely put their money in hoping to "profit[] solely from the efforts of the promoter or a third party." The precedent, which by the way is from 1946, says nothing about the role of a company like Ripple specifically.
Judge Torres also compares XRP tokens to a horse or an automobile based on other precedent, saying that people might not expect those things to appreciate in value. The analogy is ludicrous. There has at no point been a globally distributed network of people trying to pump up the value of a given car or horse, or even type of car or type of horse.
It seems pretty clear she didn't talk to any experts in the field before writing this one. Yikes. |
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July 13, 2023 at 1:13 PM EDT •  Reply • ▲0▼ |
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Aaron Greenspan
This summary judgment ruling by Judge Torres in the  Securities and Exchange Commission v. Ripple Labs, Inc. et al, New York Southern District Court Case No. 1:20-cv-10832-AT-SN case is really poorly reasoned.
Judge Torres basically says a few things that are deeply concerning, no matter what you think about cryptocurrency:
1. She says that depending on how closely investors read disclosures, that might affect whether something is a security. (What?)
2. She says that it effectively might not be possible to regulate algorithmic trading of securities because the things being traded might not be securities since the computers don't read the disclosures. (What?)
3. She says that what the SEC describes on its website as "essential managerial efforts" of a token don't matter as far as "profits derived from the efforts of others," and therefore XRP isn't a "investment contract" under certain circumstances. (What?) So I guess that if Ripple went out of business and XRP could keep trading as usual, she might have a point, but it doesn't seem to me that it would in that eventuality. *See* every other crypto token that halted trading after an implosion.
Naturally, social media and too-quick-to-publish-because-they-want-to-be-first reporters are totally misinterpreting this ruling, which also has a footnote on page 23 stating, "The Court does not address whether secondary market sales of XRP constitute offers and sales of investment contracts because that question is not properly before the Court." Thank god, because this Court clearly isn't particularly well versed in anything securities related. |
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July 13, 2023 at 12:57 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
The fundamental flaw in Judge Torres's reasoning regarding the Programmatic Sales portion of her ruling seems to be A) that she is interpreting Howey's third prong, that an investor "is led to expect profits solely from the efforts of the promoter or a third party" (on page 11 of the ruling) to mean that the profit has to be based on the work on the *specific* promoter of the security, in this case, Ripple. That's not what it says.
In this case, the third party (or in reality, many parties) would be everyone else buying the tokens. That's because cryptocurrency is a giant Ponzi scheme. With no inherent value, everything rests on Greater Fool theory, i.e. you hope that someone else is foolish enough to pay more for the worthless token than you did. So investors absolutely put their money in hoping to "profit[] solely from the efforts of the promoter or a third party." The precedent, which by the way is from 1946, says nothing about the role of a company like Ripple specifically.
Judge Torres also compares XRP tokens to a horse or an automobile based on other precedent, saying that people might not expect those things to appreciate in value. The analogy is ludicrous. There has at no point been a globally distributed network of people trying to pump up the value of a given car or horse, or even type of car or type of horse.
It seems pretty clear she didn't talk to any experts in the field before writing this one. Yikes. |
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July 13, 2023 at 1:13 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
The SEC sued Coinbase on June 6th.
U.S. Securities & Exchange Commission v. COINBASE, INC et al, New York Southern District Court Case No. 1:23-cv-04738-KPF
I think Coinbase probably hopes they get sued by regulators more often at this point.
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July 10, 2023 at 5:29 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
It was super nice of the Federal Reserve to bail out bitcoin.
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April 12, 2023 at 12:47 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
Having read, watched and listened to a variety of media outlets covering the FTX implosion, it's pretty disappointing. Many journalists have absolutely no idea what they're talking about and are continuing to lend credence to the same bankrupt concepts and people who got a lot of others into various messes in the first place. So I'm just putting this link out there as a reference for anyone interested: http://www.aarongreenspan.com/writing/20131118.hsgacstatement.pdf |
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December 2, 2022 at 8:51 PM EST • Reply • ▲0▼ |
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Aaron Greenspan
Well, that didn't take long.
Donovan et al v. Coinbase Global, Inc. et al, California Northern District Court Case No. 4:22-cv-02826-HSG |
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May 13, 2022 at 3:21 AM EDT • Reply • ▲0▼ |
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Aaron Greenspan
I don't always agree with Matt, but this is 100% correct.
https://twitter.com/matthewstoller/status/1524785800386322432 |
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May 12, 2022 at 5:13 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
I am really looking forward to seeing Coinbase Global, Inc. (COIN) sued out of existence.
I tried to warn you.
http://www.aarongreenspan.com/writing/20131201/fools-gold-20/ |
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May 12, 2022 at 12:36 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
Oh, no reason...
U.S. Securities and Exchange Commission v. Terraform Labs Pte Ltd. et al, New York Southern District Court Case No. 1:21-mc-00810 |
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May 11, 2022 at 8:41 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
Anyone with half a brain knew this day would come. The only surprising thing is that it took so long. And congratulations to the Federal Reserve, Department of the Treasury, IRS, OCC, CFTC, SEC, California Department of Financial Protection *and Innovation* (ahem), NYDFS, and of course, Congress, for allowing this to happen with years upon years of warning. https://twitter.com/ClarityToast/status/1524415247699877890 |
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May 11, 2022 at 12:26 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
lol https://twitter.com/TheWinklerGroup/status/1524138329633132545 |
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May 11, 2022 at 12:06 AM EDT • Reply • ▲0▼ |
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Aaron Greenspan
Rocky and Bullwinkle show title ideas:
"I'm just a simple man who once sued Coinbase Global, Inc. (COIN) for being an illegal money transmitter, hoping to see the former federal judge who later sat in the court where I filed that lawsuit, and who then went to work for $FB apologizing for Mark Zuckerberg and who then went to work as Coinbase Global, Inc. (COIN)'s Chief Legal Officer after that, sue his current employer Coinbase Global, Inc. (COIN) for securities fraud (which it would seem he helped orchestrate) given that his stock options just went from extremely valuable in USD to extremely worthless in USD.
Oh well, guess he can always buy everything he needs for his family in Bitcoin. Right, Your Honor?"
- or -
"If you have to buy a judge, you are probably doing something wrong." |
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May 10, 2022 at 4:47 PM EDT • Reply • ▲0▼ |
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Aaron Greenspan
Unlike Twitter, it's also possible to upload PDF files. Here's a PDF from 2013 that is related to cryptocurrency regulation. A lot of what I used to do on Twitter involved taking screenshots of PDFs, so it's kind of nice to be able to skip that step sometimes and just post the file instead!
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May 8, 2022 at 11:12 PM EDT • Reply • ▲0▼ |
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