| Bitcoin | $23,771 | 7 day: +15.1% | | Ethereum | $615 | 7 day: -0.8% | | All crypto | $645B | 7 day: +8.2% | | Bitcoin dominance | 68.2% | 7 day: +4.1% | Prices as of 10:30 a.m. EST
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The SEC says that Ripple's XRP is an unregistered security. XRP has declined 50% this week and is down 90% from its all-time highs. We covered the initial headline yesterday. In today's edition, we provide additional quotes from the SEC that are based on privileged, governmental information requests and subpoenas that were not available to any member of the general public prior to the SEC's disclosure. This lawsuit details what investors could only have imagined months ago. What the SEC found: - Writer's note: Below, the language of the SEC is unmodified, which speaks for itself.
- "From at least 2013 through the present, Defendants sold over 14.6 billion units of a digital asset security called 'XRP,' in return for cash or other consideration worth over $1.38B USD, to fund Ripple's operations and enrich Larsen and Garlinghouse. Defendants undertook this distribution without registering their offers and sales of XRP with the SEC as required by the federal securities laws."
- "Ripple created an information vacuum such that Ripple and the two insiders with the most control over it — Larsen and Garlinghouse — could sell XRP into a market that possessed only the information Defendants chose to share about Ripple and XRP."
- "Defendants continue to hold substantial amounts of XRP and — with no registration statement in effect — can continue to monetize their XRP while using the information asymmetry they created in the market for their own gain, creating substantial risk to investors."
- "Ripple engaged in this illegal securities offering from 2013 to the present, even though Ripple received legal advice as early as 2012 that under certain circumstances XRP could be considered an 'investment contract' and therefore a security under the federal securities laws. Ripple and Larsen ignored this advice."
- Chris Larsen and Brad Garlinghouse "personally profited by approximately $600M from their unregistered sales of XRP."
- "Around May 2013, Ripple explained that its 'business model is based on the success of its native currency,' that it would 'keep between 25% to 30%' of XRP, and noted the 'record highs' of prices other digital assets had achieved as something Ripple hoped to emulate for XRP."
- "Ripple made it part of its 'strategy' to sell XRP to as many speculative investors as possible. While Ripple touted the potential future use of XRP by certain specialized institutions, a potential use it would deploy investor funds to try to create, Ripple sold XRP widely into the market, specifically to individuals who had no 'use' for XRP as Ripple has described such potential 'uses' and for the most part when no such uses even existed."
- The full court filing can be read here.
Ripple's response: - Brad Garlinghouse claims that the SEC offered him a settlement that he declined. He omitted the amount of the proposed settlement.
- Garlinghouse also has posted a statement claiming, among other things, that the U.S. Treasury and Department of Justice "have long ago concluded that XRP is a currency," which will certainly be a point of contention in the upcoming months of litigation.
SEC 
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The U.S. Treasury Department's new KYC rules for U.S. crypto holders transferring funds from centralized exchanges to personal wallets could go into effect today. U.S. cryptocurrency users and exchanges supporting private wallets must comply with substantial new requirements under the rule. Know Your Customer: - The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued the notice of proposed rulemaking on Dec. 18, which would become a part of the federal register on Dec. 23 (today).
- If approved, the proposed rule would require banks and exchanges to verify customer identity and submit records of transactions valued above $3,000 related to convertible virtual assets belonging to unhosted (personal) wallets.
- To execute the proposed advancement of the Bank Secrecy Act, FinCEN aims to regulate convertible virtual currencies and legalized digital assets as "monetary instruments," without further modifying their status (as commodities, currencies, securities, or otherwise).
- The proposal could be delayed in anticipation of the public comments remaining open through Jan. 4, 2021, and to allow exchanges enough time to take the steps needed to implement the new KYC and Travel Rule requirements.
- FinCEN shortened the traditional 30-to-60-day public comment period to just 15 days.
Coindesk
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Visa (NYSE:V) has published a paper on its work with central bank digital currencies (CBDCs) and the potential for offline transactions. - A research paper submitted on Dec. 14 by the credit card giant discusses a model for offline CBDC transactions, proposing an offline payment system (OPS) protocol for the CBDC to allow functioning without internet network access. The collaborators and Visa team members cited that the OPS protocol allows instantaneous transactions using a digital currency across a point-to-point channel in a completely offline mode while also preventing double-spending.
- The paper written out of collaboration among seven senior executives, including Visa's head of crypto, proposes a CBDC model with a two-tier hierarchical trust infrastructure and an additional offline capability to enable transactions between businesses and consumers.
Decrypt
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Tron (TRX) attempts to dismiss its unregistered securities lawsuit on jurisdiction and other technicalities. - On Dec. 15, China's Tron Foundation and its founder Justin Sun filed a motion to dismiss a U.S. lawsuit alleging that the company misled investors during its 2017 initial coin offering (ICO) of its eponymous cryptocurrency, Tron (TRX).
- Plaintiffs Corey Hardin, a resident of Nevada; David Muhammad, and Chase Williams, who live in Texas; originally filed the class-action suit in April in the U.S. District Court Southern District of New York.
- Tron and Sun asked the court judge to dismiss the suit because the three lead plaintiffs did not buy the tokens during the 2017 ICO directly from Tron, and filed the court papers two years later.
- The suit also names Tron's ex-chief technology officer (CTO), Lucien Chen.
- We previously covered the Verge's exposé of Tron and BitTorrent CEO Justin Sun here.
Law360
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QUICK HITS: - Are you a seed-stage startup? The IRS could owe you tens of thousands of dollars in R&D tax credits – it's free to see how much you're owed.*
- The Commodity Futures Trading Commission (CFTC) released a digital assets "primer" on Dec. 17. The public tool from Lab CFTC provides updated information regarding digital assets, smart contracts, and digitized representations of value.
- A blockchain data alert indicated someone moved a total of 5,045 bitcoin worth approximately $98M from a wallet linked to Bitfinex's 2016 hack, through 14 consecutive transactions.
- American investment management company VanEck has launched a bitcoin exchange-traded note (ETN) on the Deutsche Boerse Xetra marketplace, after failing to gain approval for a bitcoin exchange traded fund (ETF) in the U.S.
- In collaboration with Binance, Hacken, and Crystal Blockchain, the Ukrainian Ministry of Digital Transformation launched a YouTube show for its citizens to learn about blockchain.
- European Central Bank (ECB) policymaker, and President of Deutsche Bundesbank, Jens Weidmann, explained that the ECB considers the issuance and introduction of a digital euro an "immense" technical and logistical undertaking that will take years.
- Calculate your time to retirement with this quiz and find local, fiduciary financial advisors near you in minutes.*
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☃️ Happy Holidays! ❄️ Regular publishing will resume on Monday. Thank you for reading! | |  Aaron |  |
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 |  | Curated by Associated Press fanboy, eye-strained news terminal watcher, and bitcoin follower since $1, Aaron Wise. Temporarily listening to news squawk boxes in Florida while awaiting the construction of cryptopia. | | | | Editor | Jonathan Harris is a writer for Inside.com. Previously, he wrote for The Huffington Post, TakePart.com, and the YouTube channel What’s Trending. | |
