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“XRP is no security,” says the former CFTC president, who is now being paid by Ripple.

June 17, 2020

Former Commodity Futures Trading Commission (CFTC) chairman Chris Giancarlo issued a statement on June 17 on the grounds that XRP does not meet the criteria that should be considered as a value according to the Howey test.

Giancarlo left the CFTC in April 2019 and is no longer responsible for such decisions.. Perhaps even more questionable is that he is now financially linked to Ripple, the largest holder of XRP tokens.

“XRP is not a value”

So says Giancarlo, who is also known as “Crypto Dad”. He was the one who got Bitcoin (BTC) and Ether (ETH) to declare goods. So you should know what he’s talking about, right?

“XRP is no security,” says the former CFTC president, who is now being paid by Ripple.“XRP is no security,” says the former CFTC president, who is now being paid by Ripple.

Giancarlo’s report applies the triple approach of the Howey test to XRP to evaluate it. To be considered collateral, a token must represent an investment “in (1) a joint venture with (2) profit expectations, (3) solely from the efforts of the developer or a third party”.

He concludes that XRP does not meet any of the three criteria before long-standing concerns about Ripple’s large XRP reserves and the degree of network decentralization are refuted.

But wait a second …

However, we may not get the most objective opinion on the subject.

At the end of the report, a footnote indicates that Willkie Farr Gallagher, for whom Giancarlo works as a senior lawyer, also advises Ripple on certain matters. Ripple also provided “objective information” when preparing the report.

This does not mean that Giancarlo’s arguments are invalid, although this Forbes article selects some of them as questionable. Simply that it is difficult to accept that the report is completely impartial.

And if we can’t trust it, it really doesn’t matter who wrote it.

Waviness shoots into the foot?

The final decision as to whether XRP is a security or not is likely to have serious positive or negative consequences for a large number of stakeholders in Ripple, XRP or related technology.

One can only imagine that this report should have some weight for later decision-makers of the Securities and Exchange Commission. Connections to Ripple make this questionable.

Ripple recently announced plans to expand its Liquidity on Demand (ODL) to Brazil in the near future.