XRP Lawsuit: Billionaire Mark Cuban Explains How Crypto Projects Can Avoid Being Targets Of SEC Crackdown
Billionaire investor, “Shark Tank” personality, and Dallas Mavericks owner Mark Cuban shared a proposal on Tuesday about how cryptocurrency tokens should be decentralized in the future to avoid being on the receiving end of SEC enforcement actions.
It all started when the U.S. Securities and Exchange Commission (SEC) asked Grayscale to pull its application to make its Filecoin Trust product more akin to a public company, warning that its underlying asset, Filecoin (FIL), “meets the definition of a security.”
Mark Cuban commented on a tweet regarding Filecoin being labelled a security by the SEC and shared some tips on how future crypto-focused firms could become completely decentralized to avoid facing lawsuits from the U.S. regulator for securities violations.
The American billionaire investor noted that cryptocurrency-issuing companies should consider releasing all their supply without retaining a portion as a treasury. According to Cuban, the released tokens should be used to provide liquidity using DeFi, and the original entity that issued the tokens should thereafter be dissolved. In his view, rogue regulators like the SEC will not be able to “close the token down” alleging it’s a security as it has done with cryptocurrencies like FIL, and XRP, as there will be “true decentralization”.
XRP Holders’ Lawyer Agrees
John E Deaton, a prominent pro-crypto lawyer and legal representative of XRP holders, has concurred with Mark Cuban’s suggestion. Deaton posited that it is “smart and probably in someone’s playbook at the moment.”
However, the CryptoLaw founder emphasized that the crypto community must continue pushing against the false narrative propagated by the SEC that the underlying asset in an investment contract is a security.
The SEC claims that Ripple distributed 14.6 billion units of XRP and sued the company and its former and current CEO, Chris Larsen and Brad Garlinghouse, respectively, for failure to register XRP as a security, which is a requirement for the public offering and sale of securities.
Ripple has historically maintained a distance from XRP, but any progress in the long-standing lawsuit has had an impact on the token’s prices. Most recently, XRP surged after a federal judge ruled that the SEC cannot seal materials tied to former official William Hinman’s 2018 speech on ether not being a security. Access to these emails would mean Ripple attorneys can discover how Hinman came to that determination, which could influence XRP’s classification as a security.
Deaton recently noticed that XRP was in fact, discussed between SEC staff just before the Hinman speech.
The community should keep a keen eye on June 13, 2023, where we will learn to what extent this will affect the XRP suit, which is when the Hinman documents are set to be unsealed.