A necessary clarification needs to be made with regards to securities laws because I’ve been seeing a theory lately not based on law but based on false presumptions. Before I do so, I want to note that I DO NOT think that XRP is a security (before I get “FUD” responses). 1/

Here it goes: There has been a theory that the SEC should only be pursuing the sales of XRP by Ripple, and once it exchanges hands it is no longer a security. Basically the theory is that the XRP the common investor holds (who bought off an exchange) is not a security because 2/

there is no privity with Ripple. Stated differently, the assumption is the SEC should categorize XRP into two pots: 1) XRP sold by Ripple and 2) all other XRP . The theory continues that a difference should be made and the SEC should clarify that it is only alleging the 3/

transactions made by Ripple to be transactions of securities. This theory is a fallacy. I’ve seen this theory argued by comparing XRP to a stock and noting the differences. It is important to note that this type of comparison cannot apply. 4/

The SEC is not alleging that XRP is a stock, but rather an “investment contract”. An Investment Contract is (1) an investment of money (2) in a common enterprise (3) with the expectation of profit (4) derived solely from the efforts of others. 5/