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I fear that $XRP HODLers will see the $KIN #SEC outcome as reason to dig in and hold--when in reality, the to situations are very, very different.
Time for a thread.
Time for a thread.
1/ $XRP is centralized, and is sold continually by @Ripple for revenue. It is @Ripple's only revenue stream, and is a billion dollar business. It is sold with the promise of profit--which is a main determinant whether a crypto is--or is not--a security.
2/ When #SEC sued $KIN two years ago, it's main thrust was that @Kik's token distribution event (ICO) issued/sold $KIN that did not have a use case or infrastructure, and that promises of future profits were made.
3/ In the end, the Courts determined that was true, and $Kin was issued as a de facto security. It also ruled that $Kin's infrastructure, ecosystem, and community of 55+ phone based apps in which $Kin is earned meant that it was no longer a security.
4/ So while $Kin was security at the TDE, years of work and growth and effort to build the @Kin_Ecosystem had ensured that $Kin no longer was, and was a true cryptocurrency. This distinction was acknowledged by the Court.
5/ Looking at $XRP, the situation is starkly different. @Ripple created $XRP and issues (sells) it in a multibillion dollar enterprise. While it has onboarded multiple partners over the last few years, none actually use $XRP for it's stated purpose, payment settlement.
6/ While $XRP is decentralized on a blockchain, it is quite centralized in it's control and issuance by @Ripple. This also differs starkly from the $Kin scenario, and was noted by both the #SEC and the Courts when they determined that $Kin is not now acting as a security.
7/ It has been noted that while @Kik created and issued $Kin through the TDE, after the TDE was over, @Kik has no issuance or control over the $Kin cryptocurrency. This is not true for @Ripple and it's cryptocurrency, $XRP. This is an important distinction for the #SEC.
8/ And while $XRP has made @Ripple billions of dollars, $Kin's TDE raised $100M USD, which was used to build infrastructure, pay blockchain devs, and build the world's only cryptocurrency ecosystem, with 55+ apps and millions of daily, active users.
9/ Funds from the issuance of $XRP made it's issuers rich. While @Ripple claims hundreds of partners in payment settlement and money transfer business, many are coming forward says that no such business activity has thus far taken place... notably AMEX and Western Union.
10/ Which begs the question... is $XRP a ponzi scheme? @Ripple describes a vibrant business ecosystem on it's website, but the details are not public and several partners say it hasn't happened. @Ripple reaps billions in profit, but has little to show for it.
11/ So for those holding $XRP, expecting @Ripple to come through the other side in 2 years, unscathed, like $Kin did, make sure you know the details, and the differences.
12/ #SEC is suing @Ripple for different reasons than in the $Kin case. They are going after the principles, which could become a criminal prosecution. That's not true of the $Kin case. The SEC is launching it's full effort against @Ripple, and pursuing it's owners.
13/ If the SEC is even partly successful, @Ripple will be forced to pay a billion dollar fine and forced to change it's operations. Worst case, @Ripple will cease operations, it's owners will be jailed and $XRP will be an orphaned blockchain. And legal minds feel SEC has a case.
14/ $Kin dropped by more than 95% during the SEC's suit, and even though $Kin was determined to not be a security, it has not yet recovered that lost value. It's recovering, but it's a process. If $XRP is declared a security and @Ripple is shut down, $XRP will drop to zero.
15/ So before you decide to "ride it out," know the facts. If $XRP survives, HODLers could profit, 2 -3 yrs from now, but even if the suit is won, profits may not come. The odds are long, though, and with major exchanges actively delisting it, $XRP's value is dropping rapidly.
16/16 DYODD, and best of luck. HODLing through a SEC lawsuit is not a good place to be. I've been there, as a Dev on the $Kin Blockchain. Know that the situations are vastly different. $Kin has a vibrant Dev community, millions of users, & a public use case. $XRP does not.
