SEC charges Ripple and two executives
sec.gov
sec.gov
> The U.S. Supreme Court's Howey case and subsequent case law have found that an "investment contract" exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.[5] The so-called "Howey test" applies to any contract, scheme, or transaction, regardless of whether it has any of the characteristics of typical securities.[6] The focus of the Howey analysis is not only on the form and terms of the instrument itself (in this case, the digital asset) but also on the circumstances surrounding the digital asset and the manner in which it is offered, sold, or resold (which includes secondary market sales). Therefore, issuers and other persons and entities engaged in the marketing, offer, sale, resale, or distribution of any digital asset will need to analyze the relevant transactions to determine if the federal securities laws apply.
https://www.sec.gov/corpfin/framework-investment-contract-an...
Ripple (as distinct from the XRP token it created), currently holds a large block of uncirculated XRP created at the beginning of the network. This network does away with mining in favor of the Ripple Protocol Consensus Algorithm:
https://ripple.com/files/ripple_consensus_whitepaper.pdf
This protocol foregoes mining in favor of a system without proof-of-work. The tradeoff (or feature, depending on how you look at it) was that the distribution mechanism would involve Ripple itself giving away and selling XRP. This gave Ripple complete control of the money stock at the network's inception.
This is very different from how Bitcoin currency distribution works.
Bitcoin wasn’t sold by a company entity and xrp was.
Thus far, it was said that it was sufficiently long ago for the initial distribution to not matter anymore. But all that is true for Ripple, too.
Not to defend Ripple or any one else project, but a casual observer could be forgiven to suspect more things have happened behind the scenes than what is being communicated.
I was poor, in college, and turned $70 of Bitcoin during the presale into $40,000 of Ethereum when I sold in late 2017.
Do I get to call myself an angel investor now? ;)
They forbid US persons from purchasing in their sale, which might be part of the reason the SEC never took action even though many people ignore the prohibition. You might assume that fact that they've subsequently lied and dissembled about the massive premine, or multiple times reduced the issuance rate of mined coins to prop up the price as they sold their own premined positions might count against them, but apparently not.
Who's "they". No one has lied about the premine. The crowdsale is well-documented by Ethereum-based information resources and there has been absolutely no effort to conceal or mislead about it.
>> or multiple times reduced the issuance rate of mined coins to prop up the price as they sold their own premined positions might count against them
You're conflating the community, which is the amorphous entity that has reduced the issuance rate, in accordance with a long-standing plan to adjust it to balance the need for security, and the need for token store-of-value functionality, and the Ethereum Foundation, which has no say in the hard forks that the community choose to support or not support.
ETH Cofounders got to keep 10% of the premined pool; Ethereum Foundation also got 10% of the premined pool. I'd presume these are "they".
The founders and managers of Ethereum, who repeatability lie and claim that the premine was ~10% or that it wasn't substantially premined https://twitter.com/VitalikButerin/status/120847121595601305...
Buterin elaborates on that here:
https://twitter.com/VitalikButerin/status/120909416365814988...
A pre-mine doesn't stop being a pre-mine after you've sold it and lined your pockets with the proceeds. When they eventually finish[1] dumping the rest of their coins on misguided members of the public will the pre-mine be 0%? Obviously not.
Moreover, the self same people made purchases in the "crowdsale" and then immediately paid those funds back to themselves. E.g. Hoskinson extracted a million dollars the day the presale closed.
> the stake of the founders, including the non-profit Ethereum Foundation, was 11%
Check your math because 12 million out of 72 million isn't 11%... nor does that include the additional funds 'purchased' in their share offerings (in scare-quotes because it's not really correct to call something a purchase when it was paid back).
Ethereum was 100% pre-mined. They then sold about ~80% of the pre-mine to the public (and to themselves, with no known upper-bound on percentage of the self-sales) and pocketed the proceeds. After that they issued additional coins via mining to the public and diluted their positions but later substantially cut the supply of mining off when the price kept falling. The plan now is to soon eliminate the mining and award the coins that would have been mined to existing large position holders (parties with more than $20k worth of ethereum).
When this transition is complete the issuance will be extremely similar to ripple's -- e.g. a huge amount created by the system's operator, a large portion sold by that operator to the public over time, and a portion given away as lotteries. The primary difference is that in ethereum the lottery part was conducted directly by the system through diluting the operators shares rather than being handed out in airdrops as Ripple did, and -- of course-- the relative amounts of these groups. Ripple has been a lot greedier about it.
[1] Technically they'll never finish, because of the more recent plans to continue to award these massive pre-mine holders with additional coins in perpetuity in exchange for taking them out of circulation, they'll be able to largely preserve their position while continuing to dump on the public.
You should be ashamed of yourself for willfully spreading disinformation.
It's a perfectly reasonable argument, and only someone acting in bad faith would characterize it in such a baseless and inflammatory way, as "willingly committing fraud".
The tweet:
>>That includes the presale. Those coins were assigned in an open process anyone could participate in, like mining. It's arguably more accurate to say those coins were mined, the mining algorithm was just sending BTC to 36PrZ1KHYMpqSyAQXSG8VwbUiq2EogxLo2
The expanation found in the tweet stands.
>>Check your math because 12 million out of 72 million isn't 11%...
I'm assuming he's referring to the amount allocated to the Ethereum Foundation and founders as a share of the total amount issued at the time he posted the tweet.
But the primary point is, he's making a case that an amount allocated for an open presale is not a premine.
>>nor does that include the additional funds 'purchased' in their share offerings
The BTC spent went to a non-profit foundation, so not accessible to the founders for personal reimbursement, absent complex fraud.
Your conspiracy theories notwithstanding, the founders were on equal footing with every one else in the crowdsale.
Simply repeating a lie does not make it true. The creators of ethereum created 72 million ether. They sold 60 million of it to themselves and others and they benefited from the sale. This is precisely what a premine is, and it is almost identical in structure to other premined altcoins.
They subsequently paid the funds received from the presale to themselves in their entirety. The foundation's current funds come from selling a large portion ($100 million USD) of the pre-mined coins at around Ethereum's all time high in 2018. ( https://www.trustnodes.com/2019/12/13/ethereum-foundation-so... ).
> Your conspiracy theories notwithstanding, the founders were on equal footing with every one else in the crowdsale.
100% percent of the funds in the pre-sale were eventually paid back to the founders and their employees starting with a million dollar payment to their CEO the literal day the presale closed (and a few days before he left the org). Anyone who stood to be repaid from their own payments was in a substantially advantaged position.
The earliest presale participants also participated at significantly reduced prices.
"Salting" the tip jar by participating in presales at reduced rates or with rebates was an established fraudulent practice in cryptocurrency prior to Ethereum's creation, one that Ethereum's CEO previously also engaged in prior altcoins.
Moreover, the terms of their presale expressly prohibited the participation of US persons. There is no way in which you can claim there was a broadly equal playing field here.
Even if the presale had been an equal playing field that wouldn't have changed the fact that the issuers of ethereum conducted a security sale which directly enriched themselves to the tune of millions of dollars before the system was even running, and has subsequently benefited them to the tune of hundreds of millions of dollars.
Once again: a distribution established by a process with open access, with all parties on equal footing, can be reasonably considered to not be a premine.
Calling it a lie, and spouting other inflammatory accusations, doesn't change that.
>>100% percent of the funds in the pre-sale were eventually paid back to the founders and their employees starting with a million dollar payment to their CEO the literal day the presale closed (and a few days before he left the org).
I don't believe word you say. If you're claiming a massive embezzlement of the BTC funds, go ahead and prove it. The BTC address is known so you should be able to track every transaction.
Thus far you've exposed yourself as engaged in little more than a disinfo campaign.
>>Even if the presale had been an equal playing field that wouldn't have changed the fact that the issuers of ethereum conducted a security sale
The SEC has already said that since the pre-sale happened before the 2017 ICO bulletin they issued, it was exempt from enforcement action.
Maybe you could start helping crypto adoption instead trying to lord over people by claiming you know better than them what market options they should utilize, and that it's for their own good for those market options to be shut down and disrupted by government agencies.
This is definitely not a legal opinion.
You're conflating the multitude of individual ETH owners, who now have the ability to stake ETH to get a right to become a validator and earn new ETH, with a singular entity in control of the vast majority of XRP.
Miners and node operators had to generate the data for the Genesis Block by themselves by scraping the Bitcoin chain which contained the crowdsale transaction data. The Ethereum Foundation only provided a script for scraping the Bitcoin chain. See here: https://blog.ethereum.org/2015/07/27/final-steps/
(The genesis block contains all the ETH token allocations for each crowdsale account)
Another technicality is that Ether was sold as a commodity, for the purpose of using it for "gas" to use for computational resources. Ripple on the other hand is not used for gas, you don't pay for computing resources. You only pay a tiny fee in XRP per transaction.
I don't feel like there is much 'smart money' investing in XRP, so I think increased regulatory oversight is probably beneficial here.
Cheaper units are almost certainly not indicative of something being a better investment, I'd say the opposite is more often true: ex. penny stocks or any of the long-tail cryptocurrencies that trade at fractions of a penny.
Especially for low-priced cryptocurrency, the marketing pitch of "it's like bitcoin for $1" could be very appealing, if you spread it on Reddit and other forums.
So from a pump-and-dump perspective it may be more promising.
If you went back a decade in time while you were at it, maybe. But there's been such a relentless tide of cryptocurrency-related scams being spammed on forum boards since Bitcoin hit popular awareness that the only thing I can think of that would be less appealing is someone trying to flog discount pharmaceuticals.
A $1 increase on a $1 investment is already a 100% return. And it's much easier to imagine a coin to go from $1 to $2 then it is to go from $20k to $40k.
no. it goes down to 8 decimal places. (a satoshi)
Will they go after Stellar next?
Another interesting fact about McCaleb: he started MtGox (and sold it to magical tux)
After it was robbed once and was insolvent without disclosing it...
Also the 2011 big mtgox theft after the acquisition came in via Jed's still present administrative account (he retained administrative access because part of the terms of the sale entitled him to a share of revenue).
To quote Nouriel Roubini, Economist:
No use ever, past, present and future for XRP and Ripple products... it is already flopping after spending a fortune and printing a huge amount of totally useless XRP. (Now the XRP army of Twitter trolls, bots, hired guns and zealots will attack again...)
"Imagine you go into a room of computer scientists and say: 'I've developed the most secure form of money possible, it's so secure you can't keep it on your computer and you have to dig a hole in your backyard and keep it there' you'd be laughed out of the room."
https://www.reuters.com/article/us-markets-saft/saft-on-weal...
In Europe, there's the E500 bill, which is a bit more practical for large amounts, and some have expressed a desire to withdraw it from circulation for this reason.
That's why the Bundesbank have always been inflation hawks and had to be convinced that the Euro would remain similar in focus to the Deutschmark.
Whether that is still true after 2008 is an interesting question :)
The scale of the cutback that Brüning enacted from 1930 to 1932 is truly staggering. The authors estimate that Brüning cut German government spending by about 15 percent, after inflation, from 1930 to 1932. He raised income taxes on high earners by an average of 10 percent, and slashed unemployment, pension, and welfare benefits. The economic consequences were horrific. GDP fell by 15 percent, as did government revenue. Unemployment increased from 22.7 percent to 43.8 percent. Brüning came to be known as the “Hunger Chancellor.”
My understanding as an expat was the same as alasdair's - 2010-2015 I saw plenty of Germans drop a couple 500s to pay for hotel stays, major appliances, etc. Few people had a credit card and those that did didn't want to use it domestically. It's changing now but people still carry more cash and true credit card payments are still often impossible even as bank cards are now more common.
I guess you could argue this is also related to Weimar inflation, but I don't think it's so specific. Germany has seen multiple major regime changes in the space of one lifetime.
He gave a scathing talk criticizing cryptocurrencies and blockchains and all other things in the space. I shook his hand afterwards and told him that while I disagreed with some of his opinions, I really respected his conviction to give a talk to a room full of "crypto zealots" and stick to his opinions.
A very kind fellow in conversation, but he sure knows how to deliver bitter critique.
Roubini sure called that one.
Unlike Bitcoin, which issues new currency units through mining, XRP is issued by Ripple. The case against Ripple appears to revolve around this point: is the XRP token a security?
To me the distinction is very clear and simple. However if I really needed money I still would probably issue an ICO and claim it is not a security because there is a big possibility that it will go unnoticed as SEC goes only after the bigger fish.
https://www.axios.com/sec-official-ether-is-not-a-security-9...
If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.However, in Ethereum's case, it is designed to literally implode due to ice age if Vitalik doesn't intervene. The SEC was probably not cognizant of this fact when they made their statement.
But Ethereum Classic and Ethereum share a common blockchain history and it proves that the community doesn't always follow blindly the proposals of the Ethereum devs.
That event (a part of the community splitting of on a hardfork and forming Ethereum Classic) has affected the governance of Ethereum ever since. Not directly, but indirectly.
Every hardfork is now checked for contentious changes very thoroughly. The last major change that didn't make it because of that was the proposed change to the mining algorithm (granted, ProgPOW had other problems as well).
There is no real world use. It probably wouldn't even exist without Grayscale.
It so happens that the consensus of the majority decided to stick with Ethereum rather than classic. But still no single person or entity gets to decide.
The Ethereum foundation kept a huge stash from the pre-mine, so you'd have a hostile actor with a large position on your forked chain, enough to crash the price of any nascent chain. This combination is a governance model rooted in game theory.
Ethereum Classic shows pretty well how this works in practice. There was controversy around the DAO, yet no fork could be kept functional. It is a Grayscale project which they will keep around as long as people are willing to speculate on it. Nobody pretends it has any real use.
This is completely false. The Ethereum Foundation has less than 0.5M ETH, or less than 1% of the total supply.
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The "Ice Age" is a builtin feature of the Ethereum chain, where the mining difficulty deliberately ramps up to an unreasonably level past a certain number of blocks. The only thing which can reset this is for nodes to update to a revised consensus algorithm.
The point of this is to essentially force a periodic "vote of confidence" -- instead of nodes passively not updating their software, every few years they HAVE to, or the difficulty bomb comes into play. Which means when a major hard fork update is proposed, no one can sit on the sidelines, they have to either choose the proposed fork, or propose an alternative for consensus to rally around. This cycle repeated every year or so, and has gone pretty smoothly so far.
The point of this is to encourage active participation, so nodes can't sit there and cast "passive no" votes to everything, they're incentivized to actively participate in the network's evolution.
Even if a node doesn't update, mining just slows down. Nothing anywhere in that process will cause the Ethereum network to "implode", that's IMO a rather emotionally charged way of describing things.
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As to "requiring Vitalik's intervention" -- that's just an outright falsehood.
Not only is Vitalik not directly involved in the coding of any of the multiple independent Ethereum clients anymore, but there is a very large group of developers (of which the "founders" are a very small %) which work out the proposals for updates. And anyone can propose an update -- the software and the high level specs are all open source (and most are on github).
Proposing a full milestone update of the Ethereum network is complex, and probably more work than a single individual could pull off reliably -- but that's the whole point. There is no gatekeeper (and definitely not Vitalik), and the only way these things are accepted is because the larger community (validators/miners, folks running nodes, user community) all feel involved enough to accept or reject proposals.
You could remove every single founding developer, every incorporated organization, and the Ethereum network and it's developers would keep going. And the value of the token derives from it's use on the network, not on those companies turning a profit (and most of them are non-profits).
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All of the above, along with numerous other aspects of the new beacon chain, are designed to incentivize decentralization of assets and control, as well as active over passive participation.
I think the SEC was quite well aware of the situation, and made the right call about Ethereum.
But otherwise this document spells out everything that Ripple/XRP critics have been trying to drill into XRP Army conscripts for half a decade.
That Ripple is in the business of selling XRP and uses ambiguity between the context of “ripple” and deflection to say there are third parties using enough XRP to make it scarce in the future. When this was never happening, and to this day is not happening.
The complaint mentions a third party that paid to get XRP this year to use a Ripple Labs product. They bought the XRP from Ripple to the tune of $70mm and immediately sold it on the public markets.
I think the illusion is shattered with this complaint. But XRP should be able to retain its transfer usage, just back at 2013 price levels.
Looks like CrossTower has already de-listed XRP from its exchange. Incredible how fast information gets digested in crypto markets!
https://thecryptoreport.com/an-sec-victory-in-ripple-case-wo...
You: I’m not sure that I would put it that way, but let me clarify using your analogy. What this model shows is the music, so to speak, just slowing. If the music were to stop, as you put it, then this model wouldn't even be close to that scenario. It would be considerably worse.
The only things that matter are hype, and people buying/selling according to what people think other people are going to do.
Nearly every crypto-related story comes with narratives that it's good for the exchange rate for various reasons, but ultimately the price goes up (temporarily) because people expect other people to expect the price to go up and want to get ahead of it.
The true winners of crypto will be the ones who can come up with better models of human nature and hype, and all the factors at play, and leverage that to their success, just like the true winners at casinos are those who can learn to count cards, except with crypto they won't be able to kick you out.
It's also a market where market manipulation and insider trading is fair game, and that needs to be modelled in as well.
It's an interesting time we live in, and it's an interesting anarchic economy with its own interesting set of problems to solve.
The problem is that humans are impatient and even "short term" may be a couple of decades before it all shakes out.
It's truly fascinating how little the underlying technology of cryptocurrencies matters to the exchange rates and how they're traded.
Fun fact: Ripple actually lost some of the early history of their ledger! Everything before block 32569 was lost.
Yes. That's why Coinbase got out of margin trading. They claim the SEC made them do it. But all the SEC did was to say that "delivery" meant delivery to the customer's wallet, not an entry on Coinbase's books. Coinbase was willing to exit margin trading rather than actually pay out.
This follows the procedure for physical commodities, like grain. A key point there is that the organization storing the grain is totally separate from the trading process. What you're trading is a warehouse receipt for grain in a grain elevator somewhere. You can "take delivery" by getting the warehouse receipt and starting to pay storage charges. At that point your broker no longer has access to the asset. Eventually someone buys it who actually intends to use it, and they have it loaded onto a train or truck.
The key point here is separation between the broker, exchange, and storage facility. Cryptocurrencies use cryptographic wallets instead of warehouses, so "delivery" means delivery to the user's wallet.
Not necessarily in support of Ripple specifically, but I do think having something that can actually challenge the SEC and reduce them to tears is a good thing. There are lots of things about the capital economy that could use change.
- centralized (as witnessed by the fact that the SEC has an actual target to go after)
- "pre-mined" (initial Ripple crowd gave themselves everything and once in a while toss a handful of XRP to the plebs)
- controlled by scammers
I get that there is a lot more money in it than that, but let's be honest about something, if half the people sold Bitcoin tonight - they HAVE to get out today, it's "market cap" would likely go from nearly half-trillion to probably $300M overnight. Even though technically it should only cut in half right?
This is often repeated but not necessarily true. I don't own a particularly large amount of Apple stock, but if the price dropped even a little bit, and if I knew the drop was due to nothing more than this weird thing where everyone was selling for some reason, I might decide to own more. If aliens sent out a mind control signal that caused every Apple shareholder to start selling, the buyers (whoever they were, maybe the aliens? ;) ) would compete with each other to buy.
To give you a concrete example, let's say I am the only owner in the world of a flying car. One day, I decide to sell it. 100% of the owners of flying cars have decided to sell, but the price would clearly not drop to zero! The idea that everyone selling implies the price will drop to zero applies to pure Keynesian beauty contests where 100% of the value is in owning something perceived to be valuable. For currencies that is completely true, but for companies that is less true.
This is always true. It doesn't have to go to zero to qualify as plummeting.
Your examples are incompatible.
See how ridiculous it is to nitpick purely hypothetical situations?
What you're really looking for is the fact that Apple shares have an intrinsic value related to the company's assets and future cash flows. Bitcoin, on the other hand, has an intrinsic value of zero, so it could theoretically plummet all the way to zero. Same goes for some companies' stocks
Yeah, it could be applied to anything. Its conclusion is true for everything. Prices will not actually go to zero when everyone sells, unless there is no intrinsic value.
With virtual coins, the bottom is literally zero. It is completely plausible that one day just nobody wants to buy $CRAPCOIN at any price. If for BTC there's probably always be some market (one has to pay the ransomware and buy drugs somehow ;) for novelty coins there's no reason to have any hard bottom, and thus no real downwards limit to "capitalization".
For long holder, the difference between 10x upside and 1000x upside is interesting, but the difference between 0.9x downside and 1.0x downside is not, because you haven't invested literal all your wealth in the asset.
https://en.wikipedia.org/wiki/Price_fixing
If you remove the collusion, then market cap appears to me to be a fair valuation.
If there is a shock to the system and everyone wants to immediately sell (despite previously wanting to hold), I would argue that to be a sudden change in the valuation.
Market cap is only meaningless if the participants in the market are trading at random prices, which they're not.
To validate this theory, just look at M&A. Companies get bought at close to or above their market capitalisation every day of the week.
Facebook's main store of value is eyeballs, which can evaporate quickly.
That said, it’s always seemed like a scam to me.
A lot of post-Bitcoin "cryptocurrencies" are nothing but a cargo cult: https://www.youtube.com/watch?v=qmlYe2KS0-Y
You need to use centralized exchanges in order to buy in or cash out. Even small entities trading on platforms like LocalBitcoins need to adhere to KYC laws.
If you were to use cryptocurrency as actual money, I can't see it being cost effective, legal or convenient to only trade with fly-by-night currency exchangers in South America in order to buy and sell cryptocurrency "anonymously".
Why is it that Lightning Network seems to be the only L2 solution with Bitcoin? Because it’s a Blockstream product.
It’s still odd that Blockstream had significant number of developers working on the core protocol.
If your point is that we should just “take all the warning labels off of everything and let the situation resolve itself,” no thanks. I don’t have the time to research the exact origin of everything I put in my mouth. I have to trust that when I buy food, someone out there has at least made an attempt to minimize the chances that it contains loads of mercury.
Are you running extensive tests on everything you eat and drink? The air you breathe? Sure, companies might not want to ruin their reputation by selling such goods, but, then again, we have Ripple. So which is it?
Or maybe I just need to be more selective about which companies I choose, right? Despite seeing exit scam after exit scam, incompetent blunder after blunder, that will surely protect me better than the SEC et al doing their damn jobs.
No. I want oversight. Sure, that doesn’t mean I can let my guard down; I still have to be selective. But at least there’s a pretty low chance that the brand-name toothpaste I use tonight—or the <insert snake oil here> I use instead—is slowly killing me.
Also it seems OP considers SEC part of the ecosystem that helps weeding out the scammers.
- Ripple blatantly flaunted regulation from the start.
- Tether is illegal for U.S. persons: "Any individual who is a U.S. Person and any entity that is a U.S. Person is prohibited from using the Site or any Services" (https://tether.to/legal/) They are unregulated. I've called Tether "Satan hell spawn" to people that ask me about it.
It's still up 128% over the past year. I'd guess this will actually have a Streisand Effect and the added publicity will cause the price to rise in the semi-short term.
ripple could disappear and XRP would still exist and and otherwise be functional
It is certainly true for Ethereum, which pretty much invented or at least popularized the ICO concept, and that is the second most traded cryptocurrency in existence.
Is it supposed to be a faster Bitcoin? Is it supposed to be a less Chinese-controlled (supposedly) cryptocurrency than Bitcoin?
Let's for the sake of discussion give them the benefit of the doubt.
i doubt there was much logic applied, past the idea of getting rich, to the few thousand crypto currencies that were born in the last decade.
But you can if you hint that if they buy your crypto tokens, those tokens will go to the moon.
To achieve that speed, banks transfer a digital currency (XRP) issued by Ripple instead of traditional currencies. It takes a few seconds for XRP transactions to settle, instead of days for traditional currencies via SWIFT.
The value of this currency is decentralized, in the sense that people trade it with other currencies (which is also how Bitcoin, Ethereum etc. are valued).
In the eyes of the SEC, the fact that XRP is directly issued by Ripple makes it similar to issuing shares. Even if Ripple doesn't control the value of the shares (XRP), they still manage the supply.
Just want to note that interbank transfers via Fedwire are (a) close to free and (b) instantaneous.
International wires are a bit of a mess. But there are alternatives to SWIFT.
Also, SWIFT is just a messaging protocol. The actual settlement is handled separately. This was Ripple’s original pitch, but it changed along the way.
If I want to send someone a few USD and I know their IBAN or SWIFT + name, address, what does my bank do? Is there a Visa/MC for wire transfer? (I know that SWIFT operates a network for banks, but then how do banks settle? Is the SWIFT message a legal claim?)
1. Your bank sends a secure message to the overseas bank through the SWIFT network (this is where the SWIFT number is used for routing the message) to the recipient's bank, detailing the transaction.
2. Through the SWIFT standard message format, the overseas bank validates whether the account exists in their bank. Some additional screening is done at this stage to detect fraud, money laundering, etc.
3. Your bank and the overseas bank have a predefined agreement on a correspondent account, i.e. a bank account in the US owned by the overseas bank to receive USD. If everything checks out, your bank wires the money via a domestic system like Fedwire to settle the transaction.
4. The overseas bank confirms that the money was wired to their US account, and then adjusts the recipient's balance accordingly.
Or have accounts with banks that have accounts overseas, yes. For example, Fidelity piggybacks on JPMorgan for a lot of its overseas transfers.
Is there a routing system between SWIFT members based on who has settlement (nostro/vostro) accounts between each other?
As far as I know Libra/Diem is more customer-facing, whereas Ripple is mostly marketed to banks for faster international transfers.
For small payments though, I've just used something like TransferWise which is great and really fast too.
The biggest problem with Ripple was that there was never actually any compelling need for the XRP token, because you'd need an extra currency conversion for a cross border payment... So I believe mostly the only way that they'd got partners to test out their system was to actually pay them from money they'd got selling XRP tokens to speculators.
1. https://www.swift.com/our-solutions/swift-gpi/instant-cross-...
>If you suspect you have been tricked into paying someone you should contact your financial institution immediately and report it to the police.
If you pay erroneously, what happens next?
If someone tricks you into sending them money, that's just fraud same as credit card fraud or wire transfer fraud or crypto scamming fraud. What are you getting at?
This is exactly as safe as the previous system which took up to 48 hours to transfer the money.
Cross-border payments have usually taken longer, but the point of my comment is that that is very quickly changing (and already has come a long way in just the last few years). So you may be thinking of older technology or places with less advanced banking systems than what a lot of countries have now?
The pitch was that Ripple, the company, was going to sell XRP, the cryptocurrency, to the general public in order to fund all of their growth. Then, when banks ostensibly adopted XRP for their banking needs, the banks would be forced to pay exorbitant amounts of money to buy the artificially-scarce XRP from all of the speculators who got in early.
Everyone conveniently ignored the fact that large banks are not dumb, and they had no real reason to use a currency literally invented out of thin air to power their transactions. If banks really wanted to use cryptocurrency to trade among themselves, they'd obviously just roll their own cryptocurrency. Or they'd just copy-paste the permissively licensed Ripple code and call it something like BankCoin. No one could ever give me a good reason why banks would have no choice but to buy up arbitrary XRP from general public speculators.
As I recall Ripple was originally a network-of-issuers for multiple issuer-specific tokens model, it wasn't supposed to be a single-issuer/single-token. The XRP token itself was never intended to be the asset, it was only a cost-token that fuelled the exchange of other issuers' tokens, similar to offline community exchange systems (CES). Ripple the company post-dates Ripple the project, which AFAIK was originally solidly non-commercial in motivation. I was part of the early commercialization of Ripple sort of by proxy while building Kraken, although I was opposed to the move. Aside from the money people, there were some good engineers involved with the right intentions, drawing from solid experience and with an awareness of CES and attempts at networking thereof.
The whole central banking thing was a post-facto marketing push as crypto went mainstream AFAIK. I believe some of the people changed at some point, but I didn't have time to focus on Ripple and never met them. I believe the Ripple narrative mirrors my overall experience with crypto: nice technical ideas by people with positive social visions, suddenly people get paid to do it, utopian visions rapidly replaced with money people, regulatory ingress effectively destroys the USP, whole thing turns in to a scam, regulations become warped in to a system of protectionism and government effectively in cahoots with the dominant players. A real education in human behavior.
> whole thing turns in to a scam
Ironically, the narrative that Ripple the project was unrelated to Ripple, the scammy company, was also frequently used to hype XRP in the early days.
It was a convenient way to give two narratives to the same cryptocurrency. People could either choose to believe in the Ripple (the company) banking system, or they could choose to believe in Ripple (the project, the technology). Win-win for speculators.
No one is really disagreeing that Ripple was something else entirely before it became the popular Ripple/XRP scam, but that doesn't really matter in the context of this SEC lawsuit.
To quote Nouriel Roubini, Economist:
No use ever, past, present and future for XRP and Ripple products... it is already flopping after spending a fortune and printing a huge amount of totally useless XRP. (Now the XRP army of Twitter trolls, bots, hired guns and zealots will attack again...)
(I'm not a fan of XRP, anyways)
As someone who is a huge supporter of decentralized/unregulated crypto like BTC, I am just laughing my butt off watching the SEC rip ripple to pieces like this. Hope it shuts down.
Those guys seriously had no idea what they were talking about 95% of the time, and despite being being one of the few that had both a Consultant with (at the time 8 years in Crytocurrency) and Developer roles prior to having my own fintech startup in Bitcoin for 4 years before that I was always the 'debbie downer' when I tried to explain the limitations of this technology and brought people back to Earth. Especially at the time as we were dealing with the war leading up to Segwit and Bcash hardfork and barely starting to make inroads with Lightning Network proofs of concept in the Bitcoin community. I'm glad I left when I did, but IBM had everything going for it in that space and despite that they still managed to cock things up because they're too blinded by their old contracting business model instead of actual innovation. They lost their vision a long time ago, and subsisting on Government and Military contracts is what probably made them this complacent.
In short, now after ~10 years in Crypto you'd be an idiot to deal with xrp and I don't feel bad for anyone that gets burned; I'd prefer it died without with no State intervention, but as some of you may know we've dealt with a lot of that in Bitcoin and only came out stronger while this may kill this project entirely. Just keep that in mind when you see why Bitcoin keeps defying every possible analyzer's projections and why even its main detractors (JP Morgan et al) have had to eat their weight in crow and are trying to get in after having ruined the banking Industry yet again with their largess and corrupt business model.
0: https://thexrpdaily.com/2019/01/27/stellar-partner-ibm-confi...
It does not. Several people claimed Bitcoin would be in the $100K-$1,000K range by now.
By what metrics? The node count has increased since then and the hashrate keeps increasing to record highs, you have no way to prove what you just said and it borderlines absurd hyperbole/total BS. Block size wasn't the issue to solve the issues Bitcoin was having, if it were BCash would not be an entire waste of time/resources as no one uses it and it has no volume to speak of. And this is all after Ver/Jihan (speculation) were spamming the network to clog the mempool with low fee txs, and it still didn't work as that made Bitcoin hit its first 20k ATH mark.
> Small blockers hijacked the network via block stream and ruined bitcoins scalability at the behest of their $400 mil investors.
'Small blockers' also known as the Core Developers understood that Jihan and Ver were corrupt imbeciles with nothing but greed driving their motives, and it was clear Roger had no idea about the tech in question and his arguments fell apart under basic scrutiny. Bcash is living proof of that reality and has no tx volume and a only a percentage of of BTC's value despite taking Jihan's majority hash rate with them. And both STILL mine Bitcoin anyway...
> /r/Bitcoin is one of the most censored subreddits, ironic for a centralized platform.
I'm not disputing that, I've had several posts of mine censored since I joined in 2012, its hardly where I would say anything but meme shix-postin takes place with the occasional useful post, like the one from Andy who is pilot testing his LN Tesla charging system. Theymos and his Mods are not who I would trust to be the arbiter of 'free speech' that much is correct. Only uninformed tourists go there to get their information about BTC.
> Your smug “we can/have done nothing wrong” attitude literally caused the BCH/BSV forks...
Not true as I may be an early adopter I had only reluctantly put myself in the spotlight due to my startup when it was necessary and turned down many more offers to speak after I exited my startup so I hardly have 'influence,' but lets say I did: and if it did I'm glad it did, because Bcash Ver/Jihan were cancer and we were stagnating with people like Gavin, the Foundation, Hearn etc... They're all dead weight and I'm glad we excised them before they all brought us down with them. I'm not satisfied where we are in terms of progress after so many lost years, but I'm glad to see Bitcoin has made as much progress as it has.
I'd say that we proved what we sought out to do, and still have more work to do. Mistakes were definitely made, we still do not have privacy features on by default like mixing to enhance security on the mainchain. Something that I thought we should have been focused on and implemented long ago. LN is coming along nicely, too, but still needs way more work to accommodate the influx txs to operate at the level we all feel it should, but again, progress takes time.
I'm not even going to touch the ETH non-sense you spouted off about. The fact that Cryptikitties is the most notable thing to have ever come from ETH proves why smart contracts was always Vitalk's vaporware de-jour and I cannot comprehend what it sought or will ever do after so many years meandering in obscurity and countless hacks.
But Solidity is total garbage and having it forced on me was what made it so easy for me to leave tech as things had gone incredibly wrong if corps thought that made any sense. IBM had so much anti-Bitcoin propaganda in its course material, and was so often repeated despite most there (including the higher up execs and CEO) not knowing more than buzzwords.
When being empirically proven correct to detractors is seen as 'smug' that is one of the points of validation and metrics I use when we proved the impossible. I've seen it enough times in various Industries to know that, so interpret all of this as you will.
This is the core attitude of every Bcasher -- they want complicated technical arguments requiring decades of distributed systems experience to be hashed out by clueless people on Reddit. It makes absolutely no sense unless the absolute point of it all was to sabotage Bitcoin's actual merit: decentralization and immutability.
Gavin started pulling this shit after developing a relationship with the CIA. One wonders Bitcoin XT, Bitcoin Unlimited, Bitcoin Cash, one attempt after another to ruin the decentralized nature of the Bitcoin protocol. Thankfully nobody bought what these guys were selling.
They literally can’t imagine a world where actual crypto diehards sold their BTC in disgust years ago for huge profit to move into better, more decentralized projects with functional communities.
> Unlike Bitcoin, which issues new currency units through mining, XRP is issued by Ripple
Nobody can "print money" with bitcoin. That isn't the case with Ripple
The SEC does not considers Bitcoin a security, as it's "decentralised enough". Nobody is running Bitcoin alone, selling them alone...
The Ethereum sale was probably a security offering, but it is now "decentralised enough" too for the same reasons.
First a securities designation and being forced to report financials doesn't completely destroy the transactional use case, so thats a big misconception in the crypto world. It would be incredibly inconvenient though and I doubt counterparties for the few Ripple products that are powered by XRP will ever want to hold and use XRP.
http://arringtonxrpcapital.com/2017/11/28/announcing-arringt...
Disclosure: I have no stake in Ripple
Even cryptocurrency aside, government enforcement against unlawful forms of non-traditional finance is something many people are interested in.
More than a few people here have faced the decision of accepting a more traditional legal fund-raising model or trying some vaguely legal ICO scheme that put them in direct competition in the fundraising market with outright scammers and had to make hard decisions.
Enforcement actions make it clear that people who chose to avoid those waters weren't just leaving money on the table for no reason.
I could create a blockchain and issue a quintillion coins and if I manage to get it listed and sell some for a fraction of a penny it'll have a bigger market cap than the rest of crypto combined.
I don't want to ban you because posts like https://news.ycombinator.com/item?id=23450857 are much better.
Go fight them in court if you thought you would win, the crypto folks should have enough money for now.
I don't remember signing anything.
Do you?