About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

19 Duke L. & Tech. Rev. 1 (2020-2021)

handle is hein.journals/dltr19 and id is 1 raw text is: RIPPLE EFFECTS: HOW IN RE RIPPLE LABS INC. LITIGATION COULD SIGNAL THE BEGINNING OF THE END OF THE PAYMENT PLATFORM LINDSAY MARTIN' ABSTRACT Ripple Labs provides an international payment network that allows financial institutions to transfer money more cheaply and quickly than traditional international payments. Ripple's native digital currency, XRP, supports global payments by acting as intermediate currency between different currencies, eliminating correspondent bank's need to hold deposits in foreign currencies. In an ongoing class action lawsuit, XRP purchasers claim that the digital asset qualifies as a security under federal securities laws and that Ripple illegally offered and sold XRP as an unregistered security. Given Ripple's rising prominence as a tool for financial institutions, this pending case will impact cryptocurrency markets and international payments. Because XRP is most likely a security subject to regulation by the Securities and Exchange Commission (SEC), this matter poses an existential threat to the Ripple network. This note examines the legal issues leading up to the Ripple litigation and explains why XRP is most likely a security. It concludes by discussing the SEC's likely approach to Ripple's unregistered Initial Coin Offering (ICO). INTRODUCTION Today, most global payments rely on outdated technology.' To transact with entities in foreign countries, financial institutions must be members of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network2 and maintain a correspondent banking relationship with a bank in that foreign country.3 The process is slow, expensive, and carries risks that international payments will not reach their intended destination due to the lack of an international central settlement institution.4 Duke University School of Law, J.D. expected May 2021. 1 Our Company, RIPPLE, https://ripple.com/company (last visited Nov. 14, 2019). 2 Shobhit Seth, How the SWIFT System Works, INVESTOPEDIA (Feb 11, 2020), https://www.investopedia.com/articles/personal-finance/050515/how-swift- system-works.asp; see infra Part I Section A (explaining SWIFT, a messaging system used by banks and financial institutions to send and receive money transfer instructions). 3Chelsea Allison, What is SWIFT?, FIN (Mar. 1, 2019), https://fin.plaid.com/ articles/what-is-swift/. 4 See Marcel T. Rosner & Andrew Kang, Understanding and Regulating Twenty- First Century Payment Systems: The Ripple Case Study, 114 MICH. L. REV. 649, 656-57 (2016).

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most