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hello this is attorney jeremy hogan and welcome to another edition of legal briefs crypto edition today we get a little crazy american crypto style got a busy vlog today so hang on to your hats first we are going to discuss the tether lawsuit and then segue into what i see as the true danger to the crypto market and possibly the true savior and then saving the best for last we'll finish with the xrp lawsuit analysis which was very interesting for me and then a surprise at the very end to keep you hanging on quick disclaimer i am a lawyer on youtube with an american psycho thumbnail for all that is good in the world do not take this as legal or financial advice you are now crypto rich go spend your money on a local lawyer lincoln needs new tires okay let's get going and i have been asked a lot of questions about the tether lawsuit and spent some time yesterday to dig into it a little bit if you are interested in crypto legal issues i would urge you to sign up for a pacer account which is what lawyers have which gives you access to the actual pleadings filed in all federal courts it's a small charge i think it costs about three cents a page to pull this stuff up and also i would urge you to try to stay away from the media report sometimes they just get it wrong and a little bit slanted in how they report it so anyway let's take a look at the june 2020 amended complaint in the tether lawsuit i pulled this up and i took a look at it so let's take a look at it together so here it is and right away we see that it's filed in new york which is probably a good venue for a complicated technical class action lawsuit now i suggested in my last video to always go to the bottom of a lawsuit and look for what the damages are that the plaintiff is asking for but that's not going to work here because it's a class action meaning you're going to have a lot of plaintiffs and therefore no individuals damages are going to be asked for in the prayer for relief but i do like how the plaintiffs throw it all on the table in paragraph one they tell us what the lawsuit is all about right out of the box plaintiff alleges that the defendants engaged in a sophisticated pump and dump scheme paragraph two alleges that defendant's misconduct was quote staggering in its scope and audacity i'm not sure i like that paragraph as much a little bit too dramatic for federal courts now i want to caution you in reading any lawsuit that these are just allegations and it's easy to allege things and make it sound horrible for example take a listen to this and this is just something i made up but to give you an idea what lawyers can do in pleadings on december 31st 2020 john smith did conspire with his co-defendant jane smith to obtain and convey items regulated by the state health commission by utilizing a draft item governed by the uniform commercial code in interstate commerce now what does that mean if it was in a pleading i just alleged that john and jane ordered food for delivery and paid for it with a check point being you have to learn to look beyond the strange legal language and get to the real issue to see what is actually being alleged and take away how horrible it sounds so right away in this tether lawsuit i can cut through the fluff and tell you what the issue is here and there's actually two of them first going down to paragraph 12 plaintiff alleges that defendants quote market manipulation caused the price of bitcoin to increase 25 times and by the way ether and litecoin also spiked around that time now that's a big allegation and although i haven't had time to read the original lawsuit i am guessing that the judge was not happy with this allegation in the original complaint it was probably too bare bone in the original and that's why the judge required there to be an amended lawsuit filed just an educated guess because if we go down into paragraphs 260 to 290 let's look specifically at paragraph 272 we see the plaintiff trying to show the court how exactly bitfinex pumped up the price of bitcoin using tether and there's lots of well done charts and graphs and diagrams for example in 272 the correlation is being made between the dollar transfer by bitfinex is that how you pronounce it which are the blue lines and the green line which is the price of bitcoin the plaintiffs in this lawsuit are in difficult place because it's easy to allege a pump and numb but it's much harder to prove it by facts and evidence that are admissible in a court of law in this case we'll come down to a battle of experts economics guys trying to argue really complicated market forces and pin them on the actions of one company now the other issue i see right away will be damages it's possible that certain plaintiffs bought at the allegedly inflated prices and sold at a loss but it's also possible that some plaintiffs held onto some or all of their bitcoin and are actually now up in their positions making money i mean bitcoin recently topped its 2018 value so it's very possible and that would mean no damages for the long-term holders in any case the lawsuit certainly has teeth there's some really bad stuff in there but it's going to be difficult to meet the burden of evidence to prove that the defendants actually specifically caused the spike in price now as the defendant says quote coincidence does not equal causation and that is absolutely true but there does come a point where even a circumstantial case can be proven and there are some allegations in this complaint which would lead up to that point and i think meet the burden if they are indeed proven now i can't tell you what the ultimate resolution will be but what i can guarantee you is that this is a case that will not be resolved quickly but really what came to my mind finishing a review of the tether lawsuit is a bigger picture issue because the allegations are really bad and they make for good sound bites you know fraud rico violations collusion and all of these things get to the ear of regulators and legislatures and trust me they are chomping at the bit to regulate and get a piece of the growing crypto market sec vincent the treasury department which leads to my next quick topic the coming regulation battle against crypto in general now the sec versus ripple lawsuit is just the beginning crypto is getting too large to ignore and making too many headlines now i did a fun video last saturday which only about three people watched but that's okay right where i talked about money uh and how it has taken over the political process in the last 40 years and this is an example of why it's really important to have a broad knowledge of the law and and the things surrounding it because it got me thinking where are the crypto lobbyists and pacs look at this graph it shows you some recent lobbying activities see the u.s chamber of commerce at 77 million dollars and the business roundtable at 20 million now that money includes bank lobbies hell even amazon and facebook spent 16 million dollars each so where are the crypto lobbyists i mean the battle has begun and crypto's not even on the field i mean ripple spent like 200 000 last year on lobbying efforts that's it so i did find that there is a crypto association called the blockchain association and all of you watching out there should get involved because this is where the war will be won or lost mark my words i've seen it happen with workers compensation in california in the 2000s i saw it with insurance laws here in florida in the 2010s the insurance lobby got laws changed and won the war even when they were losing the battles in court point being the crypto industry needs to get involved in lobbying and legislative efforts because that's where i think this is heading anyways final topic for today and a surprise at the end i want to talk about xrp and once again the ripple litigation i found something really game changing for me this weekend now a couple days ago you know i was in bed i was drifting to sleep listening to a crypto youtube channel does anyone else do that fall asleep watching youtube vlogs and i heard the vlogger talking about an sec lawsuit against kit interactive except i was half asleep so i didn't really and i don't remember which channel it was on and i heard kitkat for some reason the kitkat coin and then i fell asleep so the next day i was at work searching for kitkat coin on my computer but i couldn't find anything but eventually i did find the kick interactive kik interactive lawsuit and it involved the kin token and i eventually found the lawsuit in final judgment and i pulled one very interesting little nuance from it that i had previously missed relating to the large amount of xrp held in escrow a vital point so let's start with the final judgment against kick and take a look this pleading is different than anything we've looked at before this is a final judgment meaning the case was litigated to a finish this was not a settlement kik was sued by the sec in 2019 for its ico and the allegations were that its sale of the kin token was the sale of an unregistered security now in the second paragraph you see the procedural stance of the case the court granted quote summary judgment for the sec now summary judgment means that the case was a complete slam dunk for the sec it means there was no issue of fact to even be looked at by the trial judge it didn't even make it to the trial i mean the judge just looked at everything in the court file and made a determination that as a matter of law the kin tokens sold during the ico were securities and why is that important because in litigation the winner drafts the final judgment always so i know that this final judgment was written by the sec and that's a little bit different than everything that's come before so let's take a look at what it says now skipping down to paragraph 3 it penalizes kick five million dollars ouch but kick paid it apparently and actually after this final judgment was entered the ken coin price actually spiked i think it more than double but that's not my focus today that's for other people now here's what caught my eye instead let's take a look at roman numeral 2. it says that with respect to the tokens already issued and any new issuances of the tokens the defendant must provide notice to the sec 45 days before any sales it doesn't say that kit cannot sell the coins just that it must give notice to the sec now i thought that was very interesting so i went back up to section one and there i saw that the defendant was being enjoined from violating security laws in the absence of an exemption now remember the sec could have drafted this any way they wanted and they decided to allow for sale under exemptions hmm interesting so i went down that road a little further and here's what i found now going to the sec website i found the sec rule 501 regulation d and let's just take a quick look at that this regulation allows for sale of unregistered securities to quote accredited investors you just have to file something called a form d with sec and it's just something saying what is being sold and to whom and then you can sell securities as long as they are to accredited investors and here are what accredited investors are by definition basically what you are seeing is that the sec is supposed to protect the small investor where there is a large imbalance of power between the seller of securities and the buyer however if the buyer is a sophisticated investor or a company they are considered an accredited investor and you can sell securities to them by simply filing a form d with the sec now i kind of knew about this before i just didn't know that the sec would allow it even after a successful litigation like in the kick interactive case so allow me to take off my lawyer hat for a minute and do some now semi-educated speculation my last video ended with a question as to what would happen to the xrp in escrow if ripple was not allowed to sell it now some people said that the price would go up i think that some of the more sophisticated responses were that the coin sales were needed in order for ripple to continue its work on xrp coin usage cases and to finance operations and that without the sales of xrp even if the price spiked initially it was not going to be beneficial for xrp prices in the long term because of the disastrous effects on ripple but now we have a new twist on this because in the case where the sec actually wrote the judgment against the company its desired effect was to allow sales of the coins to other companies and large investors only not to the regular old you know joe smith on the street now this solution as applied in the secb ripple litigation would allow the sale of xrp but at a slower rate than previously planned by the escrow now this solution would allow ripple to continue its operations while still decreasing supply and thus increasing demand and probably the price and that price action was exactly what we saw in the kick interactive litigation at the end after the final judgment was entered the price went up drastically and stayed up as kik sustained its business operations now listen i understand that this is just one possibility out of 10 but the fact that the sec's desired outcome leads to what i speculate would be a boon not specifically maybe to ripple but to the holders of xrp i see a set up for a win-win situation for xrp holders at the end of this litigation and to end on a personal note as i mentioned before i had only owned ethereum because i really was only very interested in smart contracts and i really only took the time to understand ethereum but the last two weeks i've learned more and more about xrp and prepping for these vlogs i think i've done my due diligence now and i understand what it makes possible and it's very exciting game changing and when i finished looking at all these things i went over today with you well i decided to jump into ownership of another crypto have a great day [Music] here we go