XRP Ninja

Send $SGB (Songbird) to another wallet using a script

2021-09-21T12:49:00.001-07:00

You need nodejs and web3 to run it:

const Web3 = require('web3');

// Variables definition
const privKey =
 '8xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx2'; // Genesis private key
const addressFrom = '0xAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA';
const addressTo = '0xBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB';
const web3 = new Web3('https://songbird.towolabs.com/rpc');

// Create transaction
const deploy = async () => {
   console.log(
      `Attempting to make transaction from ${addressFrom} to ${addressTo}`
   );

   const createTransaction = await web3.eth.accounts.signTransaction(
      {
         from: addressFrom,
         to: addressTo,
         value: web3.utils.toWei('1', 'ether'),  // Send 1 SGB. 'ether' is not a typo here.
         gasPrice: web3.utils.toWei('225', 'Gwei'),
         gas: '21000',
      },
      privKey
   );

   // Deploy transaction
   const createReceipt = await web3.eth.sendSignedTransaction(
      createTransaction.rawTransaction
   );
   console.log(
      `Transaction successful with hash: ${createReceipt.transactionHash}`
   );
};

deploy();

Rippled thread cpu usage

2021-04-12T12:47:00.003-07:00

The cpu usage of xrp.ninja validator spikes every 2 hours. I always wonder what it is doing during the spikes. So I wrote a script to report the thead cpu usage to a statsd server.

I started statsd/graphite/grafana using https://github.com/ripple/rippledmon

Then I wrote this script:

#!/usr/bin/python3
import collections
import itertools
import os
import re
import statsd
import subprocess
import time

HEADER = b'%CPU COMMAND'
STATSD = 'XXX'
PORT = 'YYY'
PREFIX = 'rippled.threads'
TOP = 'env HOME={0} top -b -n 1 -p $(pgrep rippled) -H'.format(os.getcwd())

def report(c, jobs):
    p = subprocess.run(TOP, shell=True, stdout=subprocess.PIPE,
            stderr=subprocess.PIPE)
    if p.returncode != 0:
        print(p.stderr)
        return
    m = collections.defaultdict(float)
    for line in itertools.dropwhile(lambda x: x != HEADER, p.stdout.splitlines()):
        if line == HEADER:
            continue
        usage, comm = line.decode().strip().split(' ', 1)
        if usage == '0.0':
            break
        comm = re.sub(r'(:|\s|#|\.)+', '_', comm)
        m[comm] += float(usage)
        if comm not in jobs:
            jobs.add(comm)
    m['sum'] = sum(m.values())
    with c.pipeline() as pipe:
        for comm in jobs:
            if comm in m:
                pipe.gauge(comm, int(m[comm] + 0.5))
            else:
                pipe.gauge(comm, 0)

def main():
    c = statsd.StatsClient(STATSD, PORT, prefix=PREFIX)
    jobs = {'sum'}
    while True:
        report(c, jobs)
        time.sleep(1)


if __name__ == '__main__':
    main()

This script uses top command to report thread cpu usage. I created a toprc which only shows cpu usage and command name (thread name if -H is used) and put the toprc in a different directory than $HOME and run the script in that directory.

The result shows SHAMapStore is the culprit.

The diff between the original SEC complaint against Ripple and the amended one

2021-02-18T18:49:00.002-08:00

--- original.txt 2021-02-18 18:32:43.171832036 -0800
+++ amended.txt 2021-02-18 18:32:29.103735165 -0800

@@ -1,4 +1,4 @@
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 1 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 1 of 79
 
 Richard Best
 Kristina Littman
@@ -34,9 +34,9 @@
 :
 ------------------------------------------------------------------------x
 
-20 Civ. 10832
+20 Civ. 10832 (AT)
 ECF Case
-Complaint
+First Amended Complaint
 Jury Trial Demanded
 
 Plaintiff Securities and Exchange Commission (the â€œSECâ€), for its Complaint against
@@ -53,7 +53,7 @@
 required by the federal securities laws, and no exemption from this requirement applied.
 1
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 2 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 2 of 79
 
 2.
 
@@ -103,7 +103,7 @@
 
 2
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 3 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 3 of 79
 
 VIOLATIONS
 9.
@@ -150,7 +150,7 @@
 
 3
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 4 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 4 of 79
 
 15.
 
@@ -193,7 +193,7 @@
 
 4
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 5 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 5 of 79
 
 20.
 
@@ -243,7 +243,7 @@
 
 5
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 6 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 6 of 79
 
 27.
 
@@ -287,7 +287,7 @@
 
 6
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 7 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 7 of 79
 
 through which a person invests money in a common enterprise and reasonably expects profits or
 returns derived from the entrepreneurial or managerial efforts of others. Courts have found that
@@ -331,7 +331,7 @@
 
 7
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 8 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 8 of 79
 
 ledger, such as helping secure the ledger from manipulation or other forms of attacks. Like other
 â€œdigital tokens,â€ native tokens may also be sold and traded for consideration.
@@ -383,7 +383,7 @@
 
 8
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 9 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 9 of 79
 
 43.
 
@@ -442,7 +442,7 @@
 
 9
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 10 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 10 of 79
 
 52.
 
@@ -492,7 +492,7 @@
 
 10
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 11 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 11 of 79
 
 59.
 
@@ -538,7 +538,7 @@
 
 11
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 12 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 12 of 79
 
 currency,â€ that it would â€œkeep between 25% to 30%â€ of XRP, and noted the â€œrecord highsâ€ of
 prices other digital assets had achieved as something Ripple hoped to emulate for XRP.
@@ -586,7 +586,7 @@
 
 12
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 13 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 13 of 79
 
 69.
 
@@ -624,29 +624,38 @@
 
 Garlinghouse joined Ripple as COO in April 2015 and substantially assisted its
 
-ongoing unregistered Offering by, among other things, being responsible for its operations. In
-January 2017, Garlinghouse became CEO and Larsen retained his role as chairman of the Board.
+ongoing unregistered Offering by, among other things alleged here, being responsible for its
+operations. In January 2017, Garlinghouse became CEO and Larsen retained his role as chairman
+of the Board.
 75.
 
 After the change in corporate structure, both Garlinghouse and Larsen remained key
 
-decision makers and participants in Rippleâ€™s ongoing Offering. As CEO, Garlinghouse approved
-the timing and amounts of unregistered offers and sales of XRP, and, as chairman of the Board,
-Larsen was consulted on such offers and sales. Both continue to communicate with potential and
+decision makers and participants in, and continued to direct, Rippleâ€™s ongoing Offering. As Ripple
+explained in June 2018 to a New York-based investment firm when the firm was considering the
 
 13
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 14 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 14 of 79
 
-actual XRP investors and Ripple equity shareholders and to participate in certain projects Ripple is
-pursuing with respect to XRP. Both have continued selling XRP into public markets.
+creation of an XRP-based fund, the â€œXRP Sales Committee consisting of Brad Garlinghouse (CEO),
+Chris Larsen (Co-founder and Executive Chairman)â€ and two other individuals at Ripple â€œmake[ ]
+XRP distribution and sales decisions at the company . . . .â€
 76.
 
+As CEO, Garlinghouse approved the timing and amounts of unregistered offers and
+
+sales of XRP, and, as chairman of the Board, Larsen was consulted on such offers and sales. Both
+continue to communicate with potential and actual XRP investors and Ripple equity shareholders
+and to participate in certain projects Ripple is pursuing with respect to XRP. Both have continued
+selling XRP into public markets.
+77.
+
 In 2017, Defendants also began accelerating Rippleâ€™s sales of XRP because, while
 
 Rippleâ€™s expenses continued to increase (reaching nearly $275 million for 2018), its revenue outside
 of XRP sales did not.
-77.
+78.
 
 For example, starting in 2016, Ripple began selling two software suites, xCurrent and
 
@@ -658,70 +667,76 @@
 
 Overview of Rippleâ€™s XRP Distribution
 
-78.
+79.
 
 Rippleâ€™s planned distribution of XRP succeeded.
 
-79.
+80.
 
 From 2014 through the end of 2019, to fund its operations, Ripple sold at least 3.9
 
 billion XRP through Market Sales for approximately $763 million USD.
-80.
+81.
 
 From 2013 through the end of the third quarter of 2020, Ripple sold at least 4.9
 
 billion XRP through Institutional Sales for approximately $624 million USD, also to fund Rippleâ€™s
 operations, for a total of at least $1.38 billion USD in Market and Institutional Sales alone.
-81.
+
+14
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 15 of 79
+
+82.
 
 The market price for XRPâ€”and Rippleâ€™s sales prices in the Offeringâ€”ranged from
 
 a low price of approximately $0.002 per XRP in 2014 to a high price of $3.84 per XRP in early 2018,
 an increase of nearly 137,000%. XRP traded at approximately $0.58 USD per XRP as of last week.
-82.
+83.
 
 Ripple also undertook to achieve its goal of widespread distribution of XRP by
 
 exchanging XRP for non-cash consideration, such as labor and market-making services. Through
 the Other XRP Distributions, Ripple paid third parties to assist in its efforts to accomplish as
 widespread a distribution of XRP as possible and to attempt to develop a â€œuseâ€ for XRP.
+84.
 
-14
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 15 of 71
-
-83.
-
-Since 2014, Defendants have disbursed at least 4.05 billion XRP (valued at at least
+Since 2014, Defendants have disbursed at least 4.05 billion XRP (valued at least $500
 
-$500 million USD when the XRP was distributed) through Other XRP Distributions.
-84.
+million USD when the XRP was distributed) through Other XRP Distributions.
+85.
 
 In addition, Larsen (beginning in 2015) and Garlinghouse (beginning in 2017)
 
 directly participated in the Offering by offering and selling their own holdings of XRP into the same
 market as Rippleâ€™s Market Sales, typically following the same manner of sale.
-85.
+86.
 
 From 2015 through at least March 2020, while Larsen was an affiliate of Ripple as its
 
 CEO and later chairman of the Board, Larsen and his wife sold over 1.7 billion XRP to public
 investors in the market. Larsen and his wife netted at least $450 million USD from those sales.
-86.
+87.
 
-From April 2017 through December 2019, while an affiliate of Ripple as CEO,
+From April 2017 through at least October 2020, while an affiliate of Ripple as CEO,
 
-Garlinghouse sold over 321 million XRP he had received from Ripple to public investors in the
-market, generating approximately $150 million USD from those sales.
-87.
+Garlinghouse sold over 357 million XRP he had received from Ripple to public investors in the
+market, generating approximately $159 million USD from those sales (with Larsenâ€™s sales, the
+â€œIndividual Defendantsâ€™ XRP Salesâ€).
+88.
 
 Defendants offered and sold XRP to any person, without restricting offers or sales
 
 to persons who had a â€œuseâ€ for XRP (particularly given that little to no â€œuseâ€ existed until Ripple
 subsidized some â€œuseâ€ operations in recent months, as described below) and without restricting
 anyoneâ€™s ability to resell their XRP to investors within the United States or elsewhere.
-88.
+
+15
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 16 of 79
+
+89.
 
 With respect to all four types of distribution (Market Sales, Institutional Sales, Other
 
@@ -729,13 +744,15 @@
 purchasers routinely resold XRP to other investors in the United States and other countries. These
 resales aligned with Defendantsâ€™ own goals of achieving as widespread a distribution of XRP as
 possible, which was necessary to promote an aftermarket of buyers and sellers of XRP.
-89.
+90.
 
-Defendants sold approximately 14.6 billion XRP, as summarized in Table 1, below.
+At all relevant times, Garlinghouse and Larsen knew or recklessly disregarded that
 
-15
+investors were using money to purchase XRP and that Ripple was pooling that capital to fund its
+efforts to create profits for Ripple and XRP purchasers (in the form of increased prices for XRP).
+91.
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 16 of 71
+Defendants sold approximately 14.6 billion XRP, as summarized in Table 1, below.
 
 Type of Sales
 
@@ -758,7 +775,7 @@
 
 Individual Defendantsâ€™ XRP Sales â€“ Garlinghouse
 
-321 million*
+357 million*
 
 Total Offering
 
@@ -770,28 +787,33 @@
 
 Defendantsâ€™ Market Sales of XRP
 
-90.
+92.
 
 As CEO, Larsen initiated and approved Rippleâ€™s Market Sales of XRP.
 
-91.
+93.
 
 Ripple conducted the Market Sales first by transferring ownership of XRP on the
 
 XRP Ledger directly to investors and later by using traders who specialized in algorithmic digital
 asset trading to offer and sell XRP to investors, both on the XRP Ledger and on digital asset trading
 platforms, both in exchange for fiat currencies or other digital assets such as bitcoin.
-92.
+
+16
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 17 of 79
+
+94.
 
 The entities Defendants enlisted to help carry out the Market Salesâ€”the specialized
 
 traders or the trading platformsâ€”were typically not registered with the SEC in any capacity.
-93.
+95.
 
 Ripple conducted the Market Sales by paying at least four entities commissions, paid
 
 in XRP, for executing Rippleâ€™s XRP sales to the public on digital asset trading platforms.
-94.
+96.
 
 One of these entities is based in New York and was registered with the SEC as a
 
@@ -799,89 +821,105 @@
 while another entity is internationally-based but has offices in the United States. The fourth entity,
 through which Ripple conducted most of the Market Sales, is a global digital asset trading firm with
 an office in the United States (the â€œMarket Makerâ€).
-
-16
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 17 of 71
-
-95.
+97.
 
 To increase Market Sales throughout the Offering, Ripple has also directed all
 
 readers of its website to information about â€œHow to Buy XRPâ€ and has provided a list of digital
 asset trading platforms, including some with principal places of business in the United States, on
 which investors can make those purchases.
-96.
+98.
 
 While each was CEO, Larsen and Garlinghouse had final decision-making authority
 
 over which trading venues to use for Market Sales and how much XRP to sell on a particular venue,
 which Ripple communicated to traders as an overall percentage of XRPâ€™s daily trading volume.
-97.
+99.
 
 At Rippleâ€™s direction, the intermediaries such as the Market Maker ensured that
 
 Market Sales were programmatically set not to exceed a certain percentage of XRPâ€™s overall daily
 trading volume, and Ripple referred to the Market Sales as â€œprogrammatic sales.â€
-98.
+100.
+
+Ripple employees or the Market Marker specifically sought Larsenâ€™s and
 
-On occasion, Ripple employees or the Market Marker consulted Larsen and
+Garlinghouseâ€™s approval as to parameters for conducting Rippleâ€™s Market Sales. For example, in
+mid-December 2015, Rippleâ€™s then-Chief Financial Officer (the â€œCFOâ€) emailed Larsen and
+Garlinghouse with daily updates regarding the market price and volume of XRP and how they
+impacted Rippleâ€™s Market Sales strategy. The CFO informed Larsen and Garlinghouse that the
 
-Garlinghouse as to parameters for conducting Rippleâ€™s Market Sales, which they at times approved.
+17
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 18 of 79
+
+Market Sales had been paused due to a drop in XRP price but suggested the following day that the
+sales be restarted. Larsen instead instructed the CFO to â€œkeep paused for nowâ€ and â€œ[w]ait until
+[the] market had recovered from this mistake.â€ That afternoon, the CFO indicated that the XRP
+price had remained stable that day and suggested re-starting Market Sales the following day, a
+proposal that Larsen then approved.
+101.
+
+Similarly, in April 2016, the CFO emailed Larsen and Garlinghouse regarding
+
+continued â€œdownward pressure on the price of XRPâ€ and suggested having the Market Maker
+â€œadjust down a bit our net sell target for a few days to see if we can help stabilize and/or increase
+the XRP price.â€ Larsen responded, â€œYes â€“ letâ€™s adj[ust],â€ while Garlinghouse stated that he was â€œin
+favor ofâ€ adjustment but was â€œmarginally inclined to be more aggressive when we do this.â€
 D.
 
 Defendantsâ€™ Public Distribution through Institutional Sales of XRP
 
-99.
+102.
 
 Since at least 2013, Ripple and Larsen tried to make Institutional Sales to obtain
 
 essential funding for Rippleâ€™s operations and develop a speculative trading market in XRP.
-100.
+103.
 
 Ripple viewed the Institutional Sales as the lynchpin of its strategy to generate
 
 speculative interest in XRP from public investors. As Ripple stated in a document published on its
 website on January 24, 2017, which Ripple Agent-2 authored, Rippleâ€™s Institutional Sales of XRP
 were â€œindicative of [XRPâ€™s] broader capital market potential.â€
-101.
+104.
 
 Rippleâ€”through its agents, including Larsen and Garlinghouseâ€”offered and sold
 
 XRP for investment to influential players in the digital asset space, including XRP market makers,
 dealers, and blockchain-focused private investment funds looking to create an XRP-based fund or
 include XRP in their fund. These market makers were also typically not registered with the SEC.
+105.
 
-17
+With a few exceptions, Ripple conducted the Institutional Sales through XRP II,
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 18 of 71
+which applied for a license with the NYDFS to engage in the â€œvirtual currency business activityâ€ of
 
-102.
+18
 
-With a few exceptions, Ripple conducted the Institutional Sales through XRP II,
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 19 of 79
 
-which applied for a license with the NYDFS to engage in the â€œvirtual currency business activityâ€ of
 selling â€œunits of Rippleâ€™s virtual currency . . . to institutional and other accredited investorsâ€ who are
 â€œpurchasing XRP for speculative purposes.â€
-103.
+106.
 
 From 2013 to the present, Ripple has made Institutional Sales to at least twenty-six
 
 institutional investors.
-104.
+107.
 
 Ripple made many of the XRP Institutional Sales at a discount from XRP market
 
 prices. At least seven of the institutional investorsâ€”including some described belowâ€”bought XRP
-at discounts between 4% and 30% to the market price
-105.
+at discounts between 4% and 30% to the market price.
+108.
 
 The agreements governing Rippleâ€™s Institutional Sales typically provided no
 
 restrictions on the buyerâ€™s ability to resell XRP, provided only brief lock-up periods (during which
 the investor could not resell its XRP) of typically three to twelve months, or limited the buyerâ€™s
 ability to resell quantities of XRP that could potentially lower XRPâ€™s trading price.
-106.
+109.
 
 In other words, Ripple expected that most, if not all, Institutional Sales buyers would
 
@@ -889,76 +927,127 @@
 that could be resold during any given time period. By selling at discounts to market prices, Ripple
 incentivized these buyers to seek to sell their XRP into the public markets in order to realize what
 was essentially a guaranteed profit.
-107.
+110.
 
-The paragraphs below describe three examples of Institutional Sales.
+Larsen and Garlinghouse both played significant roles in negotiating and approving
 
-108.
+Rippleâ€™s Institutional Sales and other offers and sales of XRP to institutional investors, including
+while Garlinghouse was COO.
+111.
 
-On June 12, 2017, Larsen and others employees met with an investment fund
+For example, in mid-2015, Garlinghouse negotiated an institutional investorâ€™s
 
-(â€œInstitutional Investor Aâ€), which Ripple Agent-2 described in a June 12, 2017 email to Ripple
-Agent-3 as â€œa $12B [$12 billion] alternative asset hedge fund based out of New York.â€
+purchase of XRP in connection with the investorâ€™s formation of a â€œprivate investment fundâ€ whose
+sole purpose would have been to speculate on XRP as an investment (â€œXRP Fund Aâ€). On July 10,
+2015, Garlinghouse emailed that potential investor a documentâ€”which Ripple had created in 2014
+(as described further below) and that Garlinghouse described to the potential investor as a â€œwhite
 
-18
+19
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 19 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 20 of 79
 
-109.
+paperâ€â€”entitled â€œThe Ripple Protocol: A Deep Dive for Financial Professionalsâ€ (the â€œ2014 Promotional
+Documentâ€). On August 3, 2015, Ripple, through XRP II, entered into a â€œMemorandum of
+Understandingâ€ (which Larsen signed on XRP IIâ€™s behalf), committing Ripple to sell XRP to that
+investor for XRP Fund A. Around November 2015, Garlinghouse, Larsen, and others received
+drafts of the potential offering documents for XRP Fund A and provided comments on these
+documents.
+112.
+
+The paragraphs below describe three examples of Institutional Sales, certain of
+
+which, as alleged, Larsen and Garlinghouse negotiated, approved, or signed on behalf of Ripple.
+113.
+
+On June 12, 2017, Larsen and others employees met with an investment fund
+
+(â€œInstitutional Investor Aâ€), which Ripple Agent-2 described in a June 12, 2017 email to Ripple
+Agent-3 as â€œa $12B [$12 billion] alternative asset hedge fund based out of New York.â€
+114.
 
 In 2017, Ripple sold approximately 14.8 million XRP for $2.1 million to Institutional
 
 Investor A, without restricting Institutional Investor Aâ€™s ability to resell this XRP into public
 markets in any way, at price discounts of up to 30% below XRP market prices.
-110.
+115.
 
 From at least 2016 through 2019, Ripple sold approximately 115 million XRP to an
 
 entity (â€œInstitutional Investor Bâ€) that describes itself as a â€œfull-service digital currency prime
 brokerâ€ that â€œprovide[s] investors with a secure marketplace to trade, borrow, lend & custody digital
 currencies.â€ Institutional Investor B paid Ripple approximately $6.4 million for its XRP, the first
-$500,000 of which it obtained at a 10% discount from XRP market prices.
-111.
+$500,000 of which it obtained in June 2016 at a 10% discount from XRP market prices.
+116.
+
+In an internal email on April 22, 2016, Ripple Agent-3 had sought Larsenâ€™s and
+
+Garlinghouseâ€™s approval to sell XRP to Institutional Investor B, which Ripple Agent-3 described as
+an â€œinstitutional reseller,â€ at a discount relative to current market conditions and with certain lockup restrictions. In response, Garlinghouse and Larsen both approved the saleâ€”with each separately
+telling Ripple Agent-3 that they were â€œgood with it.â€
+
+20
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 21 of 79
+
+117.
+
+Around September 12, 2016, after Institutional Investor Bâ€™s initial purchase of XRP,
+
+Garlinghouse (as COO) and Ripple Agent-3 met with representatives for Institutional Investor B.
+118.
+
+An internal Ripple email memorializing this meeting shows that Institutional
+
+Investor B explained to Garlinghouse that its â€œpurchase of XRP was simply a consequence of . . .
+Chris [Larsen] indicating XRP was central to Rippleâ€™s success,â€ but that it would no longer
+â€œpurchase more XRPâ€ unless certain â€œprerequisitesâ€ were met. These included, among others,
+Ripple â€œmak[ing] it easier to trade XRPâ€ by making it available on digital asset trading platforms,
+showing â€œmetrics and charts that show XRP trending up and to the right,â€ and â€œ[c]onsider[ing]
+moving [Rippleâ€™s] XRP into escrowâ€ to â€œguarantee distribution with a predictable and public
+schedule.â€ As Institutional Investor B explained to Garlinghouse, â€œ[i]nvestors will not invest when
+they do not understand something,â€ which required a â€œclearly defined distribution planâ€ for XRP,
+without which â€œit [would] be difficult/impossible to attract new money to XRP.â€
+119.
 
 Under the terms of its agreement with Ripple, Institutional Investor Bâ€”whose
 
 principal place of business is in Manhattanâ€”agreed to resell its XRP subject to volume limitations
 to be specified at the time of each subsequent purchase. Ripple did not restrict the entityâ€™s ability to
 resell XRP into the market in any other way.
-112.
+120.
 
 On September 24, 2018, Ripple entered into an agreement (as amended,
 
-â€œInstitutional Investor C Sales Agreementâ€), signed by Garlinghouse with a Japanese entity
+â€œInstitutional Investor C Sales Agreementâ€), signed by Garlinghouse, with a Japanese entity
 (â€œInstitutional Investor Câ€) that describes itself as â€œoperat[ing] sales and exchange service[s] of
 crypto-assets to offer safe and secure transactions of crypto-assets for as many people as possible.â€
-113.
+121.
 
 Pursuant to the Institutional Investor C Sales Agreement, Ripple agreed to make up
 
 to $1 billion worth of XRP available for purchases to Institutional Investor C from November 1,
 2018 through November 1, 2021, $800 million of which was offered at prices discounted between
+
+21
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 22 of 79
+
 15% and 30% below XRPâ€™s market price, depending on the total amount of XRP purchased by
 Institutional Investor C.
-114.
+122.
 
 Pursuant to the Institutional Investor C Sales Agreement, Institutional Investor C
 
 agreed to limit the amount of its own â€œsales or transfers of XRPâ€ to not exceed 10 basis points of
 the average daily volume of XRP trading in the market (a basis point is .0001 or 1/100th of 1%).
-
-19
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 20 of 71
-
-115.
+123.
 
 From 2018 through the end of 2019, Ripple sold over $170 million worth of XRP,
 
 approximately 719 million XRP, to Institutional Investor C, sold approximately 361 million XRP to
 Institutional Investor C through the end of September 2020, and at least another 20 million XRP
 around December 15, 2020.
-116.
+124.
 
 Table 2 specifies the amounts Ripple raised in both Market and Institutional Sales:
 
@@ -1019,14 +1108,19 @@
 Defendantsâ€™ Other XRP Distributions and â€œListingâ€ of XRP on Digital Asset
 Trading Platforms
 
-117.
+125.
 
 At times, rather than directly selling XRP into the market to fund its operations,
 
 Ripple funded its dual XRP market-creating and company financing goals by transferring XRP to
 third parties as compensation. Ripple understood that these parties would in turn sell XRP into the
 public markets (often explicitly dictating the terms under which the parties could make these sales).
-118.
+
+22
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 23 of 79
+
+126.
 
 These Other XRP Distributions consist of five other types of sales and distributions
 
@@ -1035,36 +1129,32 @@
 
 Executive Compensation Distributions
 
-119.
+127.
 
 Between December 2016 and at least May 2019, Ripple granted certain of its
 
 executives a total of approximately 900 million XRP in consideration for their labor as Ripple
 employees, at least 597 million of which Ripple has already tendered to these executives.
-20
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 21 of 71
-
-120.
+128.
 
 On December 13, 2016, Ripple granted Ripple Agent-3 and Garlinghouse 150
 
 million and 500 million XRP, respectively, in separately negotiated compensation agreements.
-121.
+129.
 
 Ripple granted Garlinghouse an additional 250 million XRP on May 29, 2019.
 
-122.
+130.
 
 Pursuant to the terms of these agreements, Ripple has transferred approximately 521
 
 million XRP to Garlinghouse and approximately 76 million XRP to Ripple Agent-3, worth
-approximately $246 million and $44 million, respectively, at the time of transfer.1
+approximately $246 million and $44 million, respectively, at the time of transfer. 1
 2.
 
 On-Demand Liquidity Distributions
 
-123.
+131.
 
 As described below, in late 2018 Ripple began to market a product (â€œOn-Demand
 
@@ -1072,52 +1162,53 @@
 jurisdiction, transfer it to a separate destination, and sell XRP for the local fiat currency, to effect
 cross-border payments. To encourage adoption of ODL, Ripple paid XRP to both the money
 transmitting businesses and certain market makers that supported the product for their efforts.
-124.
+132.
 
 Ripple chose to compensate these entities (which were not investors in XRP) with
 
 XRP directly, understanding that they would monetize their fees by selling XRP into public markets.
-125.
+133.
 
 From approximately December 2018 through July 2020, Ripple issued at least 324
 
 million XRP as fees, rebates, and incentives to entities associated with ODL, without restricting the
+
+These values are based on the weighted average of XRPâ€™s closing price for a particular day,
+month, or quarter, as reported by the digital asset platform Coinmarketcap.
+
+1
+
+23
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 24 of 79
+
 ability of these entities to resell the XRP received as incentives into public markets. This XRP was
 valued at approximately $67 million at the time of Rippleâ€™s payments.
-126.
+134.
 
 These entities typically have resold all the XRP they have received from Ripple to
 
 investors in the public markets, typically on the same day that they received the XRP from Ripple.
-127.
+135.
 
 Ripple took no steps to ensure that these entities intended to hold XRP as an
 
 investment. To the contrary, Ripple gave these entities XRP to sell into the public markets.
-
-1
-
-These values are based on the weighted average of XRPâ€™s closing price for a particular day,
-month, or quarter, as reported by the digital asset platform Coinmarketcap.
-21
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 22 of 71
-
 3.
 
 Sales of XRP into the Market on Behalf of a Larsen-Established Entity and by Ripple-Funded
 Projects.
 (i)
 
-128.
+136.
 
 RippleWorks
 
 In 2015 and 2017, Ripple issued at least 2 billion XRP as contributions to
 
 â€œRippleWorks,â€ an entity Larsen co-founded to invest in, among other things, XRP-related projects
-to further Rippleâ€™s goals of achieving widespread trading of XRP in the market.2
-129.
+to further Rippleâ€™s goals of achieving widespread trading of XRP in the market. 2
+137.
 
 Larsen co-founded RippleWorks with another individual who would become its
 
@@ -1125,66 +1216,79 @@
 RippleWorks, and Rippleâ€™s Board, including Larsen, approved giving 1 billion XRP to RippleWorks,
 in part because the Board â€œbelieve[d] [RippleWorks] will help promote [Rippleâ€™s] business.â€ On
 February 1, 2017, Ripple committed an additional one billion XRP to RippleWorks.
-130.
+138.
 
 RippleWorks worked to achieve Rippleâ€™s own goal of widespread distributions of
 
 XRP, with Larsen supervising RippleWorksâ€™ sales of XRP into the market.
-131.
+139.
 
 Ripple took no steps to ensure that RippleWorks intended to hold XRP as an
 
 investment. To the contrary, Ripple gave XRP to RippleWorks so it would sell XRP into the public
 markets and, from mid-2015 to the present, enlisted the Market Maker to sell approximately 693
 million XRP to the public on RippleWorksâ€™ behalf, for approximately $176 million.
-132.
+In a November 21, 2019 tweet, Larsen explained that RippleWorks had â€œdistribute[d]
+$25M+â€ to a number of ventures, which then presumptively resold the XRP into public markets.
 
-A November 11, 2016 email from the RippleWorks CEO to Larsen and
+2
 
-Garlinghouse exemplifies the relationship between the two entities. In the email, the RippleWorks
-CEO detailed RippleWorksâ€™ â€œ2016 Year End XRP sellingâ€ and â€œ2017 XRP Salesâ€ in order to
-â€œinsure [sic] we are all on the same page and allow anyone to chime in with any different thoughts.â€
+24
 
-2
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 25 of 79
 
-In a November 21, 2019 tweet, Larsen explained that RippleWorks had â€œdistribute[d]
-$25M+â€ to a number of ventures, which then presumptively resold the XRP into public markets.
-22
+140.
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 23 of 71
+Larsen coordinated these sales with the Market Maker by directing and approving
 
-133.
+changes to RippleWorksâ€™ XRP sales strategy. For example, various mid-2017 emails between Larsen
+and the Market Marker show that Larsen instructed the Market Maker to â€œrestartâ€ trading by one of
+its trading bots and that he asked the Market Maker to â€œmonitor[ ] closely to ensureâ€ that certain
+sales are â€œconstructive to the market.â€
+141.
+
+A November 11, 2016 email from the RippleWorks CEO to Larsen and
+
+Garlinghouse exemplifies the relationship between the two entities. In the email, the RippleWorks
+CEO detailed RippleWorksâ€™ â€œ2016 Year End XRP sellingâ€ and â€œ2017 XRP Salesâ€ in order to
+â€œinsure [sic] we are all on the same page and allow anyone to chime in with any different thoughts.â€
+142.
 
 Another example involves RippleWorksâ€™ eventual investment into a fund that wished
 
-to invest in digital assets (the â€œXRP Fundâ€) and Rippleâ€™s â€œloanâ€ of XRP to that fund so that it could
+to invest in digital assets (â€œXRP Fund Bâ€) and Rippleâ€™s â€œloanâ€ of XRP to that fund so that it could
 engage in market-making activities.
-134.
+143.
 
 In an August 27, 2017 weekly update email, Ripple Agent-3 informed Garlinghouse
 
-that the XRP Fund and Ripple had exchanged a term sheet.
-135.
+that XRP Fund B and Ripple had exchanged a term sheet.
+144.
 
 In an October 2, 2017 weekly update email, Ripple Agent-3 informed Garlinghouse
 
-that Ripple was â€œevaluating setting up [an investment in the XRP Fund] through RippleWorks.â€
-136.
+that Ripple was â€œevaluating setting up [an investment in XRP Fund B] through RippleWorks.â€
+145.
 
 On November 1, 2017, Ripple Agent-3 informed Ripple Agent-2 that Ripple was
 
 looking to â€œaccelerate/prioritize XRP-beneficial announcements,â€ including potentially the
-formation of the XRP Fund.
-137.
+formation of XRP Fund B.
+146.
 
 On November 11, 2017, a Ripple marketing executive asked Garlinghouse and
 
 Ripple Agent-3 in an email if they could use an upcoming investment conference in Manhattan to
-â€œpushâ€ the XRP Fund or the RippleWorks CEO â€œto close so we can announce.â€ The next day,
+â€œpushâ€ XRP Fund B or the RippleWorks CEO â€œto close so we can announce.â€ The next day,
 Ripple Agent-3 informed Garlinghouse that Ripple was â€œfollowing up with [the RippleWorks CEO]
-with some provisions [for the XRP Fund] to prevent harmful XRP behavior.â€
+with some provisions [for XRP Fund B] to prevent harmful XRP behavior.â€
+
+25
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 26 of 79
+
 (ii) Third-Party Incentives Through â€œxPringâ€
-138.
+147.
 
 From approximately April 2018 through August 2020, Ripple publicly marketed an
 
@@ -1193,19 +1297,14 @@
 goals of achieving widespread XRP distribution. Ripple called xPring â€œa new initiative by Ripple
 that will invest in, incubate, acquire and provide grants to companies and projects run by proven
 entrepreneursâ€ in hopes of achieving Rippleâ€™s stated goal of working to develop a use for XRP.
-139.
+148.
 
 Ripple used xPring as yet another way to get XRP into the hands of public investors
 
 through conduits, while obtaining the added benefit of incentivizing third parties to help Ripple
-
-23
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 24 of 71
-
 pursue its XRP goals. Ripple gave XRP to these entities so they would sell it into public markets
 and took no steps to ensure that xPring-funded parties would not resell their XRP to the public.
-140.
+149.
 
 For example, a November 1, 2018, two-year â€œServices and Marketing Agreementâ€
 
@@ -1215,7 +1314,7 @@
 provided that these additional parties agreed to abide by Ripple-mandated parameters for their XRP
 trading volumes. By August 2020, Ripple had paid the entity at least 364 million XRP, of which the
 entity had distributed 178 million to other parties, typically approved by Ripple.
-141.
+150.
 
 Another such distribution included a November 8, 2018 agreement wherein Ripple
 
@@ -1224,16 +1323,21 @@
 that the company would seek to resell the XRP it received from Ripple, Ripple again required the
 entity to agree to certain volume-related parameters to effect XRP sales into the market. Ripple
 eventually transferred more than 163 million XRP to this entity.
+
+26
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 27 of 79
+
 4.
 
 The XRP Options
 
-142.
+151.
 
 From January 2018 through December 2019, Ripple sold at least 1.63 billion XRP
 
 when certain entities exercised options to buy XRP that Ripple had granted (the â€œOption Salesâ€).
-143.
+152.
 
 In February 2016, Ripple granted â€œan option to purchase units of Ripple XRPâ€ to a
 
@@ -1241,74 +1345,175 @@
 exchange for advisory services providedâ€ to Ripple by Option Investor Aâ€™s founder. Ripple granted
 options for up to one billion XRP as of January 1, 2014, at prices to be determined based on XRPâ€™s
 average market prices. The options are from January 1, 2018, and for each month thereafter, until
-
-24
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 25 of 71
-
 March 1, 2022. Between 2018 and September 2020, Rippleâ€™s sales to Option Investor A consisted
-of at least 588 million XRP.
-144.
+of at least 588 million XRP. Larsen negotiated the arrangement with Option Investor A on Rippleâ€™s
+behalf and ultimately signed the final agreement with Option Investor A.
+153.
 
 Separately, in 2016, Ripple entered into an agreement with an enterprise software
 
 firm (â€œOption Investor Bâ€) based in Manhattan that gave the firm an option to buy up to 5 billion
 XRP at a discounted price in exchange for efforts to help Ripple develop a â€œuseâ€ for XRP. The
 amount of XRP available for purchase under the option was later reduced, and Option Investor B
-purchased at least 1.04 billion XRP in 2019.3
+purchased at least 1.04 billion XRP in 2019. 3 Larsen signed the Memorandum of Understanding
+with Option Investor B in May 2016.
 5.
 
 Payments to Digital Asset Trading Platforms to Support XRPâ€™s Trading Market
 
-145.
+154.
+
+Starting in 2016 at the latest, while he was Rippleâ€™s COO, Garlinghouse began to
+
+oversee, direct, and lead Rippleâ€™s efforts to make XRP available for purchasers to buy and sell on
+digital asset trading platforms incorporated in the United States and abroad.
+
+To pressure Option Investor B to sell back the option grant (which covered approximately
+5% of the XRP in existence at a reduced price), Ripple Agent-3 suggested to Ripple Agent-2 in an
+email on February 26, 2017 that Ripple make the option public. Ripple Agent-2 responded that it
+â€œwould cause us some headaches . . . Better to keep it private.â€
+
+3
+
+27
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 28 of 79
+
+155.
+
+Ripple and Garlinghouse engaged in these efforts because they believed that making
+
+XRP available on digital asset trading platforms was critical to their ability to sell XRP into the
+market at higher pricesâ€”or, as internal Ripple documents explained it, increased trading volume for
+XRP on digital asset trading platforms would create â€œmomentumâ€ for XRP.
+156.
+
+In a May 27, 2016 email, Garlinghouse asked Ripple employees for an â€œupdate on
+
+the status of . . . listing XRPâ€ on global digital asset trading platforms.
+157.
+
+In August 2016, Garlinghouse sought to persuade the president of a digital asset
+
+trading platform whose principal place of business is in California (â€œPlatform Aâ€) to permit buying
+and selling of XRP on Platform A. In an August 19, 2016 email, Garlinghouse stated he had â€œjoined
+Chris Larsen about a year ago in leading the Ripple teamâ€ and that Ripple was â€œlooking for credible
+exchanges to list XRP where we can send market makers and trading desks.â€
+158.
+
+To support Rippleâ€™s efforts to â€œlistâ€ XRP on digital asset platforms, Garlinghouse
+
+simultaneously negotiated deals as to XRP with other entities in the digital asset space. For example,
+in an October 11, 2016 email to the CEO of a California-based custodial services provider,
+Garlinghouse spoke of Rippleâ€™s â€œkey milestone of listing XRP on two digital asset exchanges by the
+end of Q4,â€ asked the provider to â€œimplement[ ] custody [or wallet] services for XRPâ€ by October
+17, 2016, and promised to â€œprovide whatever resources [were] neededâ€ for that purpose.
+159.
+
+In December 2016, Garlinghouse again sought to get XRP listed on Platform A. In
+
+a December 1, 2016 email, he stated that Rippleâ€™s 2017 â€œincentive programâ€ for exchanges, along
+with Rippleâ€™s efforts to increase institutional adoption of XRP for settlement, would â€œenhance the
+opportunity for [Platform Aâ€™s] tradersâ€ and that Ripple was â€œhappy to offer minimum monthly
+guarantees in 2017 to get this onto your near term priorities list.â€
+160.
+
+Garlinghouse and Larsen continued to participate in Rippleâ€™s effort to make XRP
 
-In 2017 and 2018, Ripple also entered into agreements with at least ten digital asset
+available to buy and sell on Platform A in 2017 and 2018. In an internal Ripple email of July 2018,
+
+28
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 29 of 79
+
+Ripple Agent-2 updated Garlinghouse on â€œtwo paths in parallelâ€ Ripple was taking to achieve listing
+on Platform A, with Garlinghouse directing Ripple Agent-2 to make any document outlining these
+paths â€œshareableâ€ and â€œreadable.â€ Larsen then weighed in, directing Garlinghouse to â€œwork on a
+fact based detailed doc that showsâ€ what he viewed as important differences between the XRP
+Ledger and the ledger for other digital assets.
+161.
+
+In 2017 and 2018, Ripple entered into agreements with at least ten digital asset
 
 trading platformsâ€”none of which were registered with the SEC in any capacity, and at least two of
-which have principal places of business in the United Statesâ€”providing for listing and trading
+which have principal places of business in the United Statesâ€”providing for â€œlistingâ€ and trading
 incentives with respect to XRP. Ripple paid these platforms a fee, typically in XRP, to permit the
 buying and selling of XRP on their systems and sometimes incentives for achieving volume metrics.
-146.
+162.
 
 As just one example of these arrangements, in May 2017, Ripple gave a digital asset
 
-trading platform, based in the United States, 17 million XRP in exchange for the platformâ€™s
-agreement to make XRP available to buy and sell on its platform, as well as rebates on trading fees
-of up to $60,000 per month for three months, and up to $150,000 in incentive payments per month
-for three months to the top three traders of XRP for other assets on the platform.
-147.
+trading platform based in the United States (â€œPlatform Bâ€) 17 million XRP in exchange for the
+platformâ€™s agreement to make XRP available to buy and sell on its platform, as well as rebates on
+trading fees of up to $60,000 per month for three months. Ripple also promised Platform B up to
+$150,000 in incentive payments per month for three months to the top three traders of XRP for
+other assets on Platform B.
+163.
 
 Between October 2016 and October 2017, Ripple distributed approximately 28
 
 million XRP to these platforms, with a then-current market value of $6.8 million.
+164.
 
-3
+Ripple viewed these efforts as critical to its ability to sell XRP at favorable prices to
 
-To pressure Option Investor B to sell back the option grant (which covered approximately
-5% of the XRP in existence at a reduced price), Ripple Agent-3 suggested to Ripple Agent-2 in an
-email on February 26, 2017 that Ripple make the option public. Ripple Agent-2 responded that it
-â€œwould cause us some headaches . . . Better to keep it private.â€
-25
+fund its operations. For example, as Ripple Agent-3 instructed a Ripple employee and an XRP
+investor in June 2017, Ripple had to â€œload[ ] with ultimatumsâ€ any conversation with one particular
+Manhattan-based digital asset trading platform (â€œPlatform Câ€), because it was a â€œHIGH VALUE
+targetâ€ for Ripple.
+165.
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 26 of 71
+Ripple tried repeatedly and unsuccessfully to persuade Platform C to â€œlist XRP on
 
-148.
+29
 
-As reflected in internal documents, Ripple made these efforts because it believed that
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 30 of 79
 
-increased trading volume for XRP on digital asset trading platforms would create â€œmomentumâ€ for
-XRP. For example, as Ripple Agent-3 instructed a Ripple employee and an XRP investor in June
-2017, Ripple had to â€œload[ ] with ultimatumsâ€ any conversation with one particular Manhattan-based
-digital asset trading platform, because it was a â€œHIGH VALUE targetâ€ for Ripple.
-149.
+[its] exchangeâ€ by offering to â€œcover implementation costs, paying rebates, [and] brokering intros to
+large XRP holders for custody.â€ Undaunted by these initial failures, Ripple Agent-3 emailed the two
+owners of the firm directly in July 2017, copying Garlinghouse, and asked: â€œDoes a $1M cash
+payment move the needle for a Q3 listing?â€
+166.
 
-Ripple tried repeatedly and unsuccessfully to persuade that digital asset trading firm
+Garlinghouse, like Ripple, also viewed these types of efforts as critical components
 
-to â€œlist XRP on [its] exchangeâ€ by offering to â€œcover implementation costs, paying rebates, [and]
-brokering intros to large XRP holders for custody.â€ Undaunted by these initial failures, Ripple
-Agent-3 emailed the two owners of the firm directly in July 2017, copying Garlinghouse, and asked:
-â€œDoes a $1M cash payment move the needle for a Q3 listing?â€
-150.
+of Rippleâ€™s efforts as to XRP. In an internal March 29, 2018 email, he described Rippleâ€™s efforts as
+to Platform C as an example of Ripple â€œdo[ing] whatever we can to invest in the success of the XRP
+ecosystem,â€ which he viewed as â€œtotally consistent with what [he had] also proactively saidâ€ to the
+public about Rippleâ€™s intended efforts.
+167.
+
+Garlinghouse also understood that, while making XRP available on digital asset
+
+trading platforms could help XRPâ€™s price, a platformâ€™s refusal to â€œlist XRPâ€â€”particularly out of
+concerns that XRP was a securityâ€”could, in the words of an April 10, 2018 Garlinghouse email to
+Platform A, â€œhurt[] Ripple.â€ Accordingly, when news suggested that Platform A had refused to
+make XRP available to the public, Garlinghouse, working with Rippleâ€™s internal and external public
+relations teams, prepared â€œtalking pointsâ€ intended to dispel the notion that XRP was a security or
+that Platform A had refused to make XRP available to the public out of concerns that XRP was a
+security.
+168.
+
+Larsen was involved in efforts to promote XRP on various platforms, even after he
+
+was no longer CEO. On August 30, 2018, he emailed Ripple Agent-1 asking if a certain futures and
+options exchange â€œstill plan[ned] to release [an XRP denominated] index today?â€ Ripple believed
+this would further their goal of getting an XRP derivative product listed on that exchange. Ripple
+Agent-1 responded that the platform was not, due to concerns raised by its lawyers. Larsen
+forwarded this response, noting: â€œWhat a pain these guys are.â€ Garlinghouse, in turn, replied by
+asking Ripple Agent-1 to keep both him and Larsen â€œupdated on this topic.â€
+
+30
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 31 of 79
+
+169.
+
+At all relevant times, Garlinghouse and Larsen knew or recklessly disregarded that
+
+XRP purchasers had a reasonable expectation of deriving profits by buying and selling XRP on these
+digital asset trading platforms.
+170.
 
 Table 3, below, summarizes the Other XRP Distributions.
 Type of Other
@@ -1335,9 +1540,6 @@
 Digital Asset Trading Oct. 2016 to
 Platforms Oct. 2017
 Total
-Table 3: Other XRP Distributions
-
-26
 
 597,000,000
 324,000,000
@@ -1347,8 +1549,7 @@
 28,400,000
 4,055,400,000
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 27 of 71
-
+Table 3: Other XRP Distributions
 F.
 
 Larsenâ€™s and Garlinghouseâ€™s Sales of XRP
@@ -1357,25 +1558,30 @@
 
 Larsenâ€™s Sales
 
-151.
+171.
 
 At all relevant times, Larsen was either the CEO or chairman of the Board of
 
 Directors of Ripple and thus part of the control group of XRPâ€™s issuer.
-152.
+172.
 
 While CEO, Larsen had the power to appoint six out of eight seats on Rippleâ€™s
 
 Board of Directors, and, as Rippleâ€™s largest equity shareholder, had 68% of its voting power.
-153.
+173.
 
 The following sales of XRP took place with Larsen working in coordination with
 
 Ripple to develop and maintain a liquid market for XRP through which Defendants could monetize
-their holdings. Email between Larsen and the Market Maker, from at least 2017 through at least
+their holdings. Emails between Larsen and the Market Maker, from at least 2017 through at least
+
+31
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 32 of 79
+
 2019, show that, like Ripple and Garlinghouse, Larsen also attempted to strike a delicate balance
 between maximizing profits from his XRP sales while not depressing the price of XRP.
-154.
+174.
 
 Larsen at times paid the Market Maker to make offers and sales of his XRP on digital
 
@@ -1383,15 +1589,31 @@
 to investors all over the world, including in the United States, without marketing or restricting offers
 or sales to persons who had a â€œuseâ€ for XRP and without restricting purchasers from reselling their
 XRP to other investors, including to investors in the United States or elsewhere.
-155.
+175.
 
 Larsen and his wife netted approximately $450 million from these sales.
 
-156.
+176.
 
-Larsen directed his offers and sales of XRP from within the United States.
+Continuing into at least 2020, Larsen directed his offers and sales of XRP from
 
-157.
+within the United States.
+177.
+
+Larsenâ€™s offers and sales of XRP occurred on various digital asset trading platforms,
+
+including Platforms A and B and at least two others incorporated in the United States, and on one
+incorporated abroad but with a principal place of business in New York. Though Larsen also made
+offers and sales of XRP through certain digital asset trading platforms whose parent corporations
+are located outside the United States, Larsen opened his account with at least one of those
+platformsâ€™ United States-based wholly owned subsidiary. Moreover, at least one of the digital asset
+trading platforms with a foreign parent through which Larsen offered and sold his XRP used
+resources located in the United States to execute Larsenâ€™s trades in XRP.
+178.
+
+Larsen made offers and sales of XRP to persons in the United States.
+
+179.
 
 Larsen intends to continue selling his XRP, as shown in an email he sent an investor
 
@@ -1399,108 +1621,130 @@
 XRP, to which Larsen described the â€œwidely held view that over time, its [sic] better to have widely
 held assets, so continued reduction of Ripple and founder holdings is likely constructive.â€ On
 September 22, 2020, Larsen also publicly confirmed from his Twitter account that he had
-transferred half a billion of his XRP, then worth approximately $115 million, to accounts he
 
-27
+32
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 28 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 33 of 79
 
+transferred half a billion of his XRP, then worth approximately $115 million, to accounts he
 established with a digital asset firm incorporated in New York, and recently did in fact make such
 transfers, further evidencing his present intention to continue his unregistered sales of XRP.
 2.
 
 Garlinghouseâ€™s Sales
 
-158.
+180.
 
 From April 2015 to the present, Garlinghouse was either the COO or the CEO of
 
 Ripple and thus part of the control group of XRPâ€™s issuer.
-159.
+181.
 
 After Garlinghouse joined Ripple in 2015, Garlinghouse was awarded XRP from
 
 Ripple, aligning his financial incentives with Rippleâ€™s. Garlinghouse later resold significant quantities
 of XRP to amass profits well over one hundred million dollars.
-160.
+182.
 
 The following sales took place with Garlinghouse working in coordination with
 
 Ripple to develop and maintain a liquid XRP market that the Defendants could monetize.
-161.
+183.
 
-From April 2017 through December 2019, Garlinghouse sold over 321 million of his
+From April 2017 through at least October 2020, Garlinghouse sold over 357 million
 
-XRP, for approximately $150 million, to the public through digital asset trading platforms or other
-intermediaries. Beginning in December 2017, Garlinghouse used the Market Maker, who deployed
-trading bots on multiple, worldwide digital asset trading platforms, to sell his XRP to the public.
-162.
+of his XRP, for approximately $159 million, to the public through digital asset trading platforms or
+other intermediaries. Beginning in December 2017, Garlinghouse used the Market Maker to sell his
+XRP to the public. The Market Maker deployed trading bots on multiple, worldwide digital asset
+trading platforms and, in the second half of 2020 alone, sold at least another $9 million of
+Garlinghouseâ€™s XRP on Garlinghouseâ€™s behalf.
+184.
 
 Garlinghouse offered and sold XRP to investors all over the world, including in the
 
 United States, without marketing or restricting offers or sales to persons who had a â€œuseâ€ for XRP
 and without restricting purchasers from reselling their XRP to other investors, including to investors
 in the United States or elsewhere.
-163.
+185.
 
-Garlinghouse directed his offers and sales of XRP from within the United States.
+Continuing into at least 2020, Garlinghouse directed his offers and sales of XRP
 
-164.
+from within the United States.
+
+33
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 34 of 79
+
+186.
+
+Garlinghouseâ€™s offers and sales occurred on various digital asset trading platforms,
+
+including Platforms A and B and at least two others incorporated in the United States, and one
+incorporated abroad but with a principal place of business in New York. Though Garlinghouse also
+made offers and sales of XRP through certain digital asset trading platforms whose parent
+corporations are located outside the United States, Garlinghouse opened his account with at least
+one of those platformsâ€™ United States-based wholly owned subsidiary. Moreover, at least one of the
+digital asset trading platforms with a foreign parent through which Garlinghouse offered and sold
+his XRP used resources located in the United States to execute Garlinghouseâ€™s trades in XRP.
+187.
+
+Garlinghouse made offers and sales of XRP to persons in the United States.
+
+188.
 
 At various times between April 2017 and at least December 2019, Garlinghouse also
 
 paused his XRP sales at the Market Makerâ€™s recommendation because XRPâ€™s market price was
-falling, seeking to avoid having the latterâ€™s own XRP sales further drive down XRPâ€™s market price.
-165.
+falling, seeking to avoid having the formerâ€™s own XRP sales further drive down XRPâ€™s market price.
+189.
 
 Recently, Garlinghouse transferred some of his XRP into accounts he opened with
 
 digital asset trading platforms, evidencing his intention to continue his unregistered sales of XRP.
-
-28
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 29 of 71
-
 III.
 
 Defendants Created and Control the XRP Trading Markets While Selectively
 Disclosing Information about Their Activities
-166.
+190.
 
 Defendantsâ€™ offers and sales of XRP in the Offering occurred into a market that they
 
 had largely created and whichâ€”consistent with their dual purposes of raising funds from their XRP
 sales and managing the liquidity of the XRP marketâ€”they played a significant role overseeing.
-167.
+191.
 
 Defendantsâ€™ efforts in this regard principally involved monitoring the timing and
 
 amount of their XRP sales and purchases, sometimes to coincide with strategic announcements
 about Ripple or XRP, and establishing an escrow for Rippleâ€™s own XRP holdings.
-168.
+192.
 
 The ability to sell investments in liquid markets is an important consideration for
 
 investors when determining whether to buy securities because it represents one way in which they
 can realize profits from their investments.
+34
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 35 of 79
+
 A.
 
 Ripple Managed the Price and Liquidity in the XRP Market
 
-169.
+193.
 
 Throughout the Offering, Rippleâ€”as Garlinghouse and Larsen directed at various
 
 timesâ€”undertook significant efforts to monitor, manage, and impact the XRP trading markets,
 including the trading price and volume of XRP.
-170.
+194.
 
 As described in Section II, these efforts included: (1) using algorithms to time the
 
 amount and price of Defendantsâ€™ XRP sales into the market; (2) paying incentives to certain market
 makersâ€”some of which Ripple engaged to effect the Market Salesâ€”if the sales reached certain
 trading volume levels on XRP; and (3) paying digital asset trading platforms to permit XRP trading.
-171.
+195.
 
 These efforts also included timing the prices and amounts of XRP sales to achieve
 
@@ -1508,127 +1752,134 @@
 Ripple sought to maximize the amount it could earn from the XRP Market Sales while minimizing
 volatility and any downward pressure on XRPâ€™s market price caused by Rippleâ€™s constant injections
 of new XRP into the market to raise operating funds.
-
-29
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 30 of 71
-
-172.
+196.
 
 Ripple internally described these strategies as aimed at maximizing the amount of
 
 money Ripple could raise in the Offering or at achieving â€œmore speculative [XRP] volume.â€ At
 times, Ripple publicly described its efforts as meant to protect the publicâ€™s investments in XRP.
-173.
+197.
 
 Starting in late 2015, Ripple directed the Market Maker to buy or sell XRP (on
 
 occasion strategically timed around Ripple announcements), to account for the volume impact of
 XRP trading, as a Ripple executive told the Market Maker by email on September 20, 2016.
-174.
+198.
 
 To accomplish this, Ripple had an internal â€œXRP Markets Teamâ€ that monitored
 
 XRPâ€™s price and volume daily and regularly communicated with Rippleâ€™s XRP market makers about
 Rippleâ€™s XRP sales strategy, which relied on selling XRP in amounts no greater than a certain
 percentage of XRPâ€™s daily volume, generally between 10 and 25 basis points.
-175.
+
+35
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 36 of 79
+
+199.
 
 Starting in 2017 at the latest, Larsen and Garlinghouse participated in meetings with,
 
 or were apprised of discussions by, the XRP Markets Team, in which they discussed adjustments to
 Rippleâ€™s sales strategy and recommendations regarding the amount of Rippleâ€™s XRP to sell, decisions
 over which Larsen and Garlinghouse had final authority as Rippleâ€™s CEOs.
-176.
+200.
 
 On April 11, 2016, Ripple also directed the Market Maker to buy XRP in the open
 
 market with the goal of â€œ[t]arget[ing] $0.008 incrementally over the course of 2 daysâ€ while
 â€œ[c]ap[ping] activity at 5% of daily trading volume[,]â€ among other things.
-177.
+201.
 
 A few months later, on August 16, 2016, a Ripple employee reported to others at
 
 Ripple the â€œrobust discussion activity [he had seen] on the XRPchat threadâ€ (which included
 â€œ[p]ositive feedbackâ€ with respect to â€œ[u]nderstanding that Ripple has a long-term strategy, in which
 XRP is one of a few big betsâ€) and the â€œnotable market activityâ€ for XRP in recent days. (â€œXRP
-Chat is an online forum that describes itself as â€œ[t]he Largest XRP and Ripple Community Forumâ€.)
-178.
+Chat is an online forum that describes itself as â€œ[t]he Largest XRP and Ripple Community Forum.â€)
+202.
 
 A Ripple vice president of finance (the â€œVP of Financeâ€) then asked Garlinghouse
 
 and Ripple Agent-3 â€œif [they] discussed whether we should turn off the buying now with this news
-
-30
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 31 of 71
-
 and the higher volume?â€ Ripple Agent-3 responded: â€œThe thesis . . . is to show a period of
 consistent buying from an account that is known to be a consistent seller. The intended impact of
 the buying is not to move the price but rather to provide confidence in the market, which in turn
 will move the price.â€
-179.
+203.
 
 Following this exchange, Ripple did not â€œturn off the buyingâ€ of XRP.
 
-180.
+204.
 
 The following month, September 2016, Ripple directed the Market Maker to place
 
 XRP buy and sell orders around the time of announcements Ripple made that month referring to
 Rippleâ€™s achievements, though neither announcement concerned XRP.
-181.
+205.
 
 On September 20, 2016, the VP of Finance emailed the Market Maker and said that,
 
 after consultation with Garlinghouse and Larsen, Ripple wanted to â€œbetter understand[ ] the impact
+
+36
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 37 of 79
+
 of our purchases [of XRP] over the past weekâ€ and that Rippleâ€™s â€œ[c]urrent thinking [was] that we
 should use our full $300k [designated for XRP purchases] in the first 24 hours post announcement.â€
-182.
+206.
 
 The next day, the Market Maker provided the VP of Finance and Ripple Agent-3
 
 with data showing â€œthe positive relationship between hourly price changes of XRP and the hourly
 Net XRP purchases,â€ while noting the lack of data to provide a â€œstatistically significant result.â€
-183.
+207.
 
 On Friday, September 23, 2016, the VP of Finance, after consulting with
 
 Garlinghouse and Larsen and obtaining Garlinghouseâ€™s â€œgo ahead,â€ directed the Market Maker to
 â€œkeep the buying light [the day after the announcement] and then do the bigger slug starting
 Sunday.â€ The Market Maker agreed.
-184.
+208.
 
 On Monday, September 26, 2016, the Market Maker reported to Ripple that it had
 
 â€œspent approximately $200K of the second trancheâ€ and recommended a strategy â€œto make
 aggressive marketsâ€ going forward, to which the VP of Finance agreed.
-185.
+209.
 
 On October 15, 2016, the VP of Finance informed the Market Maker that, after an
 
 upcoming announcement, Ripple â€œwould like to go to sales at 1%â€ of trading volume and asked the
-
-31
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 32 of 71
-
 Market Maker to â€œbe thoughtful / opportunistic around the timing of implementing 1%â€ because
 Ripple did not â€œwant to depress the rally but rather capitalize on the additional volume.â€ He further
 instructed the Marker Maker â€œto take more money off the table,â€ if there was a chance to do so.
-186.
+210.
 
 Internally, Ripple executives frequently expressed concern over XRPâ€™s price and
 
 planned proactive steps to protect the market.
-187.
+211.
 
-For example, in an August 12, 2017 e-mail to Ripple Agent-2 and Ripple Agent-3,
+For example, in 2016 while he was COO, Garlinghouse ensured that Ripple placed
 
-Garlinghouse raised concerns about XRP being â€œsquarely left outâ€ of a recent market â€œrallyâ€ and
-asked whether Rippleâ€™s recent XRP sales were â€œimpacting the market?â€ He instructed certain Ripple
-employees to â€œproactivelyâ€ attempt to increase speculative trading value with positive XRP news.
-188.
+restrictions on sales of XRP by Rippleâ€™s Co-Founder in order to quell concerns that these sales
+would negatively impact XRPâ€™s market trading.
+212.
+
+As another example, in an August 12, 2017 e-mail to Ripple Agent-2 and Ripple
+
+Agent-3, Garlinghouse raised concerns about XRP being â€œsquarely left outâ€ of a recent market
+
+37
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 38 of 79
+
+â€œrallyâ€ and asked whether Rippleâ€™s recent XRP sales were â€œimpacting the market?â€ He instructed
+certain Ripple employees to â€œproactivelyâ€ attempt to increase speculative trading value with positive
+XRP news.
+213.
 
 Similarly, in September 2019, Rippleâ€™s â€œHead of Global Institutional Marketsâ€
 
@@ -1637,45 +1888,44 @@
 recommended â€œbuy[ing] [XRP] backâ€ because she was very â€œworried about xrp at 0.20â€ and was
 â€œDREAD[ING]â€ an upcoming reportâ€”referring to quarterly reports Ripple began publishing in
 January 2017 (the â€œMarkets Reportsâ€)â€”if Ripple didnâ€™t â€œtake swift, creative action now (!)â€
-189.
+214.
 
 Defendants did not disclose publicly this XRP buying and selling strategy.
 
-190.
+215.
 
 But Ripple did publicly tout other actions it was taking to support XRPâ€™s market
 
 price, including to limit XRP supply or to create scarcity through XRP buybacks.
-191.
+216.
 
 For example, on January 4, 2017, in an effort to assuage XRP investor concerns,
 
 Ripple told Institutional Investor C that Ripple â€œonly sells or transfers XRP to financial institutions
 and accredited investors who bring payment volume and/or FX liquidity to Ripple.â€ Ripple made
 similar statements publicly, such as on its website, the â€œXRP Chat,â€ and certain Markets Reports.
-
-32
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 33 of 71
-
-192.
+217.
 
 Similarly, in its Markets Report for the fourth quarter of 2017, Ripple told investors
 
 that it placed sales volume â€œrestrictionsâ€ on the XRP it sold directly to financial institutions to
 â€œmitigate the risk of market instability due to potential subsequent large sales.â€
-193.
+218.
 
 Later, in approximately June 2020, Ripple employees prepared and delivered an
 
 internal presentation for Garlinghouse and Larsen in which the employees highlighted that â€œXRP
 began underperforming [Bitcoin]â€ since early May 2020, partly because of Rippleâ€™s sales of XRP.
 The employees proposed â€œsupply limiting tactics,â€ such as Rippleâ€™s buying back XRP.
-194.
+219.
 
 Garlinghouse approved the â€œbuy backâ€ option.
 
-195.
+38
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 39 of 79
+
+220.
 
 Following Garlinghouseâ€™s decision, Ripple disclosed on November 5, 2020, in its
 
@@ -1685,58 +1935,58 @@
 
 Defendants Established an XRP Escrow
 
-196.
+221.
 
 XRP investors became concerned that Rippleâ€™s sales could cause XRPâ€™s price to
 
 crash. As Garlinghouse explained in an internal email on May 16, 2017, XRP investors were
 concerned that Ripple could â€œsell its [then] 61.68[ ]B[illion] XRP in the market at any time.â€
-197.
+222.
 
 If Ripple had filed a registration statement and quarterly and annual reportsâ€”as it
 
 would have been required to doâ€”Rippleâ€™s sales would have been publicly disclosed. They were not.
-198.
+223.
 
 To assuage investor concerns, on May 16, 2017, Ripple announced that it would
 
 place 55 billion XRP (most of its current holdings) into a cryptographically-secured escrow that
 would restrict Ripple to accessing only one billion XRP every month (the â€œXRP Escrowâ€).
-199.
+224.
 
 Both Larsen and Garlinghouse were instrumental to the formation of the XRP
 
 Escrow by developing and, ultimately, approving the idea.
-200.
+225.
 
 An internal Ripple memo prepared by Ripple Agent-3 around April or May 2017 (the
 
 â€œProposal to Escrow Rippleâ€™s XRPâ€) explained that one purpose of the escrow was to â€œsecur[e]
-
-33
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 34 of 71
-
 speculative liquidityâ€ in XRP and to â€œdrive a material increase in XRP trading volume/liquidityâ€ by
 removing uncertainty about when Ripple might dispose of its XRP holdings.
-201.
+226.
 
 The Proposal to Escrow Rippleâ€™s XRP noted that Ripple wanted â€œmore XRP
 
 liquidity and [that its] efforts are helping, [but] things are not moving as fast as [Ripple] want[s].â€
-202.
+227.
 
 The Proposal to Escrow Rippleâ€™s XRP concluded that the XRP Escrow would be
 
 successful if it resulted in â€œimmediate increase in volume and price appreciationâ€ for XRP as one of
 the â€œ[r]ewardsâ€ to counter-balance the increased â€œ[r]iskâ€ of â€œCash flow shortfallâ€ for Ripple.
-203.
+
+39
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 40 of 79
+
+228.
 
 Ripple and Garlinghouse publicly touted the formation of the XRP Escrow as proof
 
 that Ripple and XRP holders shared a common interest in the success of Rippleâ€™s efforts as to XRP
 and as one of Rippleâ€™s many efforts to manage the trading market for XRP.
-204.
+229.
 
 In other words, by announcing the XRP Escrow, Defendants sought to encourage
 
@@ -1747,29 +1997,24 @@
 IV.
 
 XRP Was a Security Throughout the Offering
-205.
+230.
 
 As noted, the Supreme Court made clear in its Howey decision of 1946 that the
 
 definition of whether an instrument is an investment contract and therefore a security is a â€œflexible
 rather than a static principle, one that is capable of adaptation to meet the countless and variable
 schemes devised by those who seek the use of the money of others on the promise of profits.â€
-206.
+231.
 
 At all relevant times during the Offering, XRP was an investment contract and
 
 therefore a security subject to the registration requirements of the federal securities laws.
-207.
+232.
 
 Defendants understood and acknowledged in non-public communications that the
 
 principal reason for anyone to buy XRP was to speculate on it as an investment.
-
-34
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 35 of 71
-
-208.
+233.
 
 For example, Ripple Agent-3 stated in an internal document called the â€œXRP
 
@@ -1778,57 +2023,62 @@
 you are holding xrp you should want [Ripple Labs] to retain xrp for business development.â€ Ripple
 acknowledged not only that XRP holders were speculating on Rippleâ€™s ability to deploy XRP to
 develop its business, but also that Rippleâ€™s interests aligned with other XRP holdersâ€™ interests.
-209.
 
-Similarly, on December 7, 2015, Ripple requested that the issuer of a fund created to
+40
 
-generate investor exposure to XRP (through XRP Ripple sold to the fund), disclose the risk that
-XRP could be deemed a security under the federal securities laws. Specifically, Ripple requested that
-the following language be added to the risk disclosures for the fund:
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 41 of 79
+
+234.
+
+Similarly, on December 7, 2015, Ripple requested that the issuer of XRP Fund A
+
+(which would generate investor exposure to XRP through XRP Ripple sold to the fund), disclose
+the risk that XRP could be deemed a security under the federal securities laws. Specifically, Ripple
+requested that the following language be added to the risk disclosures for XRP Fund A:
 The Ripple ecosystemâ€™s reliance on the efforts of Ripple Labs â€“ the single largest
 holder of XRP â€“ to promote and expand the ecosystem, creates greater risk that
 XRP might be deemed a security as compared to other virtual currencies and
 Ripple Labs might be deemed to be operating as an unregistered securities
 exchange, broker, or dealer under federal and State securities laws.
-210.
+235.
 
 Similarly, in its official application to the NYDFS for XRP II in 2016, Ripple
 
 acknowledged that buyers were â€œpurchasing XRP for speculative purposes.â€
-211.
+236.
 
 Later, in July 2019, a Ripple senior vice president emailed the CEO of the United
 
 States branch of a digital asset trading firm with which Ripple sought to make XRP available for
 trading. In his email, the Ripple executive explained: â€œThe primary use case for XRP today is
 speculative and the exchanges . . . are the main enabler of this use case.â€
-212.
+237.
 
 Sophisticated investors agreed. For example, a hedge fund, to which Ripple sold
 
 XRP, explained to the fundâ€™s investors this economic reality in offering materials from March 2015:
 â€œThe increase in XRP value is heavily dependent on the success of Ripple.â€
-213.
+238.
 
 Consistent with its privately-stated understanding, Ripple publicly offered and sold
 
 XRP as an investment into a common enterprise that included Rippleâ€™s promises to undertake
-
-35
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 36 of 71
-
 significant entrepreneurial and managerial efforts, including to create a liquid market for XRP, which
 would in turn increase demand for XRP and therefore its price.
-214.
+239.
 
 Starting in at least 2013 and through the Offering, Defendants made statements
 
 promoting XRP as described in the preceding paragraph in a variety of publicly available media,
 including Twitter, YouTube, major financial news networks, industry conferences, the XRP Chat, an
+
+41
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 42 of 79
+
 online discussion forum and an informational posting about Ripple that it hosted on its website (but
 since deleted) called â€œRipple Forumâ€ and â€œRipple Wiki,â€ respectively, and the Markets Reports.
-215.
+240.
 
 In fact, throughout the Offering, Ripple held itself out as the primary source of
 
@@ -1838,60 +2088,65 @@
 misinformationâ€ about Rippleâ€™s alleged â€œdumpingâ€ of XRP and to address the â€œfear, uncertainty,
 and doubtâ€ about investing in XRP spread by others. Ripple thus held itself out as the legitimate
 source of information essential for investors, inviting them to rely on what Ripple chose to disclose.
-216.
+241.
 
 Based on these representations, Rippleâ€™s actions, and the economic reality, XRP
 
 investors in the Offering had a reasonable expectation of profiting from Rippleâ€™s efforts to deploy
 investor funds to create a use for XRP and bring demand and value to their common enterprise.
+242.
+
+At all relevant times, Garlinghouse and Larsen knew or recklessly disregarded that
+
+XRP investors had a reasonable expectation of profiting from Rippleâ€™s efforts with respect to XRP.
 A.
 
 Ripple Led Investors to Reasonably Expect that Rippleâ€™s and Its Agentsâ€™
 Entrepreneurial and Managerial Efforts Would Drive the Success or Failure of
 Rippleâ€™s XRP Projects
 
-217.
+243.
 
 Defendants repeatedly stated publicly that they would undertake significant efforts to
 
 develop and foster â€œusesâ€ for XRP, so that banks, financial intermediaries, or other specialized
-money transmitting businesses would want to buy it, including as alleged above in Section II. (The
-identity of the â€œusersâ€ to whom it would position XRP varied over the years as Ripple explored
-different strategies.)
-
-36
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 37 of 71
-
-218.
+money transmitting businesses would want to buy it, including as alleged above in Sections II and
+III. (The identity of the â€œusersâ€ to whom it would position XRP varied over the years as Ripple
+explored different strategies.)
+244.
 
 Defendants also persistently stated publicly thatâ€”partly to achieve the goal of
 
 widespread XRP tradingâ€”they would take steps to create, promote, and protect the market for
 trading in XRP, such as managing the manner in which Ripple bought and sold XRP, and by
+
+42
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 43 of 79
+
 persuading digital asset trading platforms to permit investors to buy and sell XRP. These statements
 led reasonable investors to expect to profit from Rippleâ€™s efforts on behalf of XRP.
 1.
 
 Defendants Promised to Undertake Significant Efforts to Build Value for XRP
 
-219.
+245.
 
 From the outset of the Offering, Defendants publicly promised significant,
 
 meaningful entrepreneurial efforts with respect to XRP.
-220.
+246.
 
 In an April 14, 2014 interview published online, Larsen explained that Ripple was
 
 â€œhelping to build in the Ripple protocol . . . the idea of an Internet-for-value exchange,â€ and that
 Ripple saw â€œthis as a SWIFT 2.0,â€ referring to the established inter-bank payment network.
-221.
+247.
 
-In approximately April 2014, Ripple created â€œThe Ripple Protocol: A Deep Dive for
+In approximately April 2014, Ripple created the 2014 Promotional Document, which
 
-Financial Professionalsâ€ (the â€œ2014 Promotional Documentâ€), which Ripple distributed publicly.
-222.
+Ripple distributed publicly.
+248.
 
 In the 2014 Promotional Document, Ripple purported to examine the â€œSources of
 
@@ -1901,25 +2156,24 @@
 unknown,â€ but predicted â€œincreased speculative interest, which may have significant impacts on
 price,â€ if the Ripple network became more well-known or used, in which case Ripple concluded that
 it â€œexpect[ed] the demand for XRP to be considerable.â€
-223.
+249.
 
-In the 2014 Promotional Document, Ripple held itself out the key party who would
+In the 2014 Promotional Document, Ripple held itself out as the key party who
 
-make these efforts with respect to XRP and the Ripple protocol, including by promising to
+would make these efforts with respect to XRP and the Ripple protocol, including by promising to
 â€œdistribute [certain XRP] to incent the participation of market makers, gateways and consumers to
 utilize the protocol,â€ and highlighting Rippleâ€™s past â€œbusiness development efforts.â€ Ripple also
-
-37
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 38 of 71
-
 noted that it had recruited a â€œdiverse set of talented individuals with experience in relevant
 technology and financial services companiesâ€ for these efforts and would enlist others to assist.
-224.
+250.
 
 Ripple repeated these types of promotional statements throughout the Offering.
 
-225.
+43
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 44 of 79
+
+251.
 
 On June 3, 2016, Cryptographer-1 explained in the XRP Chat, in response to the
 
@@ -1927,7 +2181,7 @@
 us, though itâ€™s possible.â€ But, he continued, while â€œthere are significant technical obstacles to using
 XRP as a bridge or vehicle currency[,] . . . [o]ur XRP strategy is based on promoting it as a bridging
 currency . . . through various strategies including paying traders an incentive.â€
-226.
+252.
 
 On January 21, 2017, Cryptographer-1 represented in the XRP Chat that Ripple was
 
@@ -1935,7 +2189,7 @@
 â€œseveral strategiesâ€ to do so. Months later, on September 12, 2017, he posted on Reddit that Ripple
 had previously explained that it â€œwill work to get XRP adopted for th[e] purposeâ€ of serving as a
 â€œnew intermediary assetâ€ and noted â€œwhy that would be expected to create demand for XRP.â€
-227.
+253.
 
 In an email to Rippleâ€™s equity shareholders, advisors, and others on June 5, 2017,
 
@@ -1955,25 +2209,25 @@
 approximately 500 percent in the last 30 days and over 5,000 percent from
 the beginning of 2017! . . . In fact, factoring in the approx. $18 billion of XRP
 we own, Ripple is worth more than all but four US start-ups.
-
-38
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 39 of 71
-
-228.
+254.
 
 In the same email, Garlinghouse reminded Rippleâ€™s equity investors and advisors that
 
 Ripple remained â€œcommitted to making XRP the best digital asset for paymentsâ€ and that XRP had
 â€œtechnical superiority compared to other digital assets.â€
-229.
+
+44
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 45 of 79
+
+255.
 
 Garlinghouse had made statements similar to these in an article posted on Rippleâ€™s
 
 website on May 16, 2017. A few months later, in a December 7, 2017 post on its website, Ripple,
 confirming the formation of the XRP Escrow, once more reiterated Garlinghouseâ€™s statements in
 the May 16, 2017 article and the June 5, 2017 email, described above.
-230.
+256.
 
 In a December 14, 2017 public interview, Garlinghouse explained Rippleâ€™s market
 
@@ -1981,7 +2235,7 @@
 say, is XRP liquidity. Making sure . . . we are doing everything we can to make the XRP ecosystem
 successful on a liquidity basis. Priority three which admittedly is kind of a newer priority and
 something weâ€™ll work on more in 2018, is investing in other use cases for the XRP Ledger.â€
-231.
+257.
 
 In the Markets Report for the fourth quarter of 2017, Ripple stated that â€œitâ€™s clear
 
@@ -1989,40 +2243,40 @@
 continues to seriously consider [XRP] as an alternate liquidity solution.â€ A Ripple executive
 similarly explained his view in a Yahoo! Finance interview on approximately March 15, 2018, that
 â€œthe activities of the software company create value in . . . [XRP].â€
-232.
+258.
 
 Also in the Markets Report for the fourth quarter of 2017, Ripple announced its
 
 upcoming intended efforts to â€œwork towards the launch of institutional hedging instruments and
 custody solutions,â€ which â€œare important to institutional adoption [i.e., key forces in achieving
 liquidity and price increases] and thus are important components of our 2018 roadmap.â€
-233.
+259.
 
 On September 11, 2017, Cryptographer-1 told public markets via a post on Reddit
 
 that, because â€œRipple holds more than half the XRP in existence[,] . . . Ripple can justify spending
 $100 million dollars on something if it would be expected to increase the long term price of XRP by
+a penny.â€ Then, on November 17, 2017, he posted on Reddit about why Ripple had an incentive to
+continue these efforts and why it would continue these efforts: â€œ[T]here is no rational reason why
 
-39
+45
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 40 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 46 of 79
 
-a penny.â€ Then, on November 17, 2017, he posted on Reddit about why Ripple had an incentive to
-continue these efforts and why it would continue these efforts: â€œ[T]here is no rational reason why
 [Ripple] would not continue to execute [its] publicly announced strategy and do everything we can to
 maximize the price of XRP over at least the time it takes us to sell the XRP we have.â€
-234.
+260.
 
 On January 17, 2018, Garlinghouse tweeted an article he said was â€œ[a] good read on
 
 why fostering a healthy $XRP ecosystem is a top priority at @Ripple.â€
-235.
+261.
 
 On February 17, 2020, Garlinghouse tied Rippleâ€™s efforts to create â€œuseâ€-driven
 
 demand for XRP to a potential for an increase in XRP price, in an interview on the floor of the New
 York Stock Exchange in Manhattan (the â€œNYSE Interviewâ€).
-236.
+262.
 
 In the NYSE Interview, Garlinghouse answered questions about the price of digital
 
@@ -2037,12 +2291,12 @@
 Defendants Promised to Undertake Significant Efforts to Develop and Maintain a Public Market
 for XRP Investors to Resell XRP
 
-237.
+263.
 
 Starting in at least 2014, Ripple also promised that it would undertake efforts to
 
 create, maintain, and protect secondary resale markets for XRP.
-238.
+264.
 
 For example, starting in 2014, Ripple stated on its website: â€œ[W]e will engage in
 
@@ -2050,19 +2304,19 @@
 against other currencies.â€ Years later, in announcing the XRP Escrow, Ripple reminded investors
 that it â€œengaged in distribution strategies that we expect will result in a strengthening XRP exchange
 rate against other currencies,â€ touting its â€œproven [four-year] track record of doing just that.â€
-40
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 41 of 71
-
-239.
+265.
 
 In a February 19, 2014 public interview, Larsen explained that one of Rippleâ€™s â€œkey
 
 roles is making sure that we distribute [XRP] as broadly in a way that adds as much utility and
+46
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 47 of 79
+
 liquidity as we possibly can.â€ He stated that he thought â€œour incentives are very well aligned . . . that
 for Ripple Labs to do well we have to do a very good job in protecting the value of XRP and the
 value of the network, and that really is the guiding principle here in our distribution of XRP.â€
-240.
+266.
 
 In a May 16, 2017 article on Rippleâ€™s website, Garlinghouse reminded investors that,
 
@@ -2070,46 +2324,46 @@
 goal in distributing XRP is to incentivize actions that build trust, utility and liquidity.â€ He concluded
 that, to incentivize financial institutions, payment providers, and banks to â€œuseâ€ XRP (though none
 had up to that point), Ripple â€œremain[ed] committed to increasing XRP liquidity.â€
-241.
+267.
 
 In the Markets Report for the second quarter of 2019, Ripple promised to â€œfocus
 
 institutional sales on markets where the on-exchange liquidity for XRP is insufficient to meet
 institutional demand,â€ which the report said was similar to what the company had done in 2017,
 purportedly leading to increased liquidity and â€œlistingsâ€ on digital asset trading platforms in general.
-242.
+268.
 
 In the Markets Report for the second quarter of 2020, Ripple explained that, as part
 
 of its â€œresponsible role in the [XRP] liquidity process,â€ it had begun purchasing XRP in the
 secondary market to ensure a â€œhealthy, orderly XRP market.â€
-243.
+269.
 
 Defendants engaged in many of these publicly-promised efforts with respect to XRP
 
-markets, as alleged in Section III, above.
+markets, as alleged in Sections II and III, above.
 3.
 
 Ripple Touted the Ability of Its Team to Succeed in Its Promised Efforts
 
-244.
+270.
 
 In connection with the efforts Defendants promised the markets they would
 
 undertake, Ripple at times highlighted the experience, expertise, and abilities of the â€œteamâ€ it had
 assembled, which included Ripple employees, business partners, and other agents.
-
-41
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 42 of 71
-
-245.
+271.
 
 In 2013, Ripple Agent-1 explained in the Ripple Forum that Rippleâ€™s fundraising
 
 efforts through selling XRP â€œallows Ripple Labs to have a spectacularly skilled team to develop and
 promote the Ripple protocol and network.â€
-246.
+
+47
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 48 of 79
+
+272.
 
 In a Reddit post in 2017, Cryptographer-1 was asked to explain if there was a risk
 
@@ -2121,13 +2375,13 @@
 
 Ripple Publicly Touted the Efforts That It Did Actually Undertake
 
-247.
+273.
 
 During the Offering, not only did Ripple promise efforts that could lead to the
 
 increase in value of XRP, it actually made and touted extensive entrepreneurial and managerial
 effortsâ€”made with proceeds from the Offeringâ€”to the market.
-248.
+274.
 
 In its 2016 â€œYear In Reviewâ€ summary, posted on its website on December 28,
 
@@ -2137,32 +2391,32 @@
 had not sold a single XRP to any â€œuser,â€ Ripple commented that â€œ[g]ood news for XRP kept
 coming later in the springâ€ with the announcement of a partnership with a facility to trade in XRP
 derivatives.
-249.
+275.
 
 In the first Markets Report, published on January 24, 2017, Ripple touted its
 
 announcement of XRP investorsâ€™ ability to buy and sell XRP on a new digital asset trading platform
 as â€œpart of a continued effort to expand the XRP ecosystem.â€
-250.
+276.
 
 On February 15, 2017, Ripple Agent-2 tweeted a link to an article, posted on a digital
 
 asset discussion blog, about Rippleâ€™s efforts to enlist companies to assist in its managerial efforts as
+to XRP. The article discussed Rippleâ€™s efforts to select a partner to help it build â€œfunctionality for
+XRPâ€ and directed readers to Rippleâ€™s website on â€œHow to Buy XRP.â€
 
-42
+48
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 43 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 49 of 79
 
-to XRP. The article discussed Rippleâ€™s efforts to select a partner to help it build â€œfunctionality for
-XRPâ€ and directed readers to Rippleâ€™s website on â€œHow to Buy XRP.â€
-251.
+277.
 
 As alleged above in Sections III and IV.A.1, Ripple and Garlinghouse made many
 
 statements in connection with the announcement of the XRP Escrow, reminding investors that
 Ripple had been a good â€œstewardâ€ of XRP, purportedly based on the ways Ripple had chosen to
 make its own market sales of XRP.
-252.
+278.
 
 In an interview on Bloomberg News Network (â€œBloomberg Newsâ€) in
 
@@ -2176,7 +2430,7 @@
 really reduce the friction, and weâ€™re talking about a multi-trillion dollar problem
 . . . yes, thereâ€™s going to be demand for that, when you have fixed supply . . .
 and you see increase in demand, prices go up.
-253.
+279.
 
 In a CNBC interview on March 7, 2018, Garlinghouse reminded investors that
 
@@ -2184,7 +2438,7 @@
 own a lot of XRP.â€ Thus, he continued, Ripple had â€œinvested in venture funds . . . in hedge funds
 . . . in companies, [and] . . . partnered with payment providers [and] . . . market makers, in order to
 make sure that XRP is the most useful asset out there for solving a cross border payment problem.â€
-254.
+280.
 
 On April 11, 2018, Ripple tweeted from the handle @Ripple that it â€œhad invested
 
@@ -2192,11 +2446,12 @@
 use cases beyond payments.â€ Ripple Agent-3 similarly tweeted: â€œRippleâ€™s $25 million investment in
 @blockchaincapâ€™s new fund is the first and not the last contribution to ventures that further develop
 the #blockchain and $XRP ecosystems.â€
-43
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 44 of 71
+49
 
-255.
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 50 of 79
+
+281.
 
 At various times, Ripple publicly touted that it was making certain of the XRP
 
@@ -2207,7 +2462,7 @@
 Economic Reality Dictates that XRP Purchasers Have No Choice But to Rely on Rippleâ€™s Efforts
 for the Success or Failure of Their Investment
 
-256.
+282.
 
 Economic reality has also led reasonable investors to expect that Ripple and its
 
@@ -2215,25 +2470,26 @@
 accordingly understanding that Ripple has the economic incentive and capacity to undertake efforts
 to promote XRP and the XRP Ledger, which would serve Rippleâ€™s economic interest and that of all
 XRP owners equally.
-257.
+283.
 
-Indeed, the XRP market capitalization as of last week (approximately $58 billion) and
+Indeed, the XRP market capitalization as of December 2020 (approximately $58
 
-the value of Rippleâ€™s XRP holdings (approximately $28 billion) each far exceed the value of the one
-productâ€”ODLâ€”that â€œusesâ€ XRP (which â€œuseâ€ is not market-driven, but subsidized by Ripple).
-258.
+billion) and the value of Rippleâ€™s XRP then holdings (approximately $28 billion) each far exceeded
+the value of the one productâ€”ODLâ€”that â€œusesâ€ XRP (which â€œuseâ€ is not market-driven, but
+subsidized by Ripple).
+284.
 
 The economic reality is that reasonable investors are speculating that Ripple has the
 
 incentive and potential to create demand for XRP. XRP investors are betting that Ripple may yet
 solve Garlinghouseâ€™s â€œtrillion-dollar problem,â€ and they will profit as a result.
-259.
+285.
 
 In contrast to Ripple, investors in XRP cannot take most or any of the steps that
 
 Ripple has taken to grow the XRP ecosystem and increase demand for XRP. Most, if not all, XRP
 investors simply lack the technical expertise and the resources to do so.
-260.
+286.
 
 XRP investors are not in any position to, for example, undertake various, complex,
 
@@ -2241,25 +2497,24 @@
 protect XRPâ€™s price, volume, and liquidityâ€”as Ripple has done in a purported attempt to foster
 adoption of XRP. Nor are XRP investors in any position to increase significantly â€œdemandâ€ or
 â€œvalueâ€ for XRP by developing a â€œuseâ€ for the token through entrepreneurial effortsâ€”at least not
+50
 
-44
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 45 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 51 of 79
 
 without Rippleâ€™s support. In other words, not only are Rippleâ€™s touted efforts with respect to XRP
 significant, they are essential to the success or failure of the enterprise.
-261.
+287.
 
 Investors in XRP do not exercise any control or authority over how Offering
 
 proceeds have been or will be spent. Ripple possesses sole discretion to decide how to do so.
-262.
+288.
 
 Because certain Ripple executives publicize that they hold XRP, and some (including
 
 Garlinghouse) state that they hold it as an investment, it is reasonable for a holder of XRP to expect
 these individuals to undertake efforts to increase the value and price of XRP.
-263.
+289.
 
 Defendantsâ€™ statements and actions and the economic reality of Rippleâ€™s relationship
 
@@ -2270,96 +2525,97 @@
 
 Purchasers of XRP Invested into a Common Enterprise
 
-264.
+290.
 
 Investors who purchased XRP in the Offering invested into a common enterprise
 
 with other XRP purchasers, as well as with Ripple.
-265.
+291.
 
 Because XRP is fungible, the fortunes of XRP purchasers were and are tied to one
 
 another, and each depend on the success of Rippleâ€™s XRP Strategy. In other words, Rippleâ€™s success
 or failure in propelling trading of XRP drives demand for XRP, which will dictate investorsâ€™ profits
 (recognized in increased prices at which they could sell XRP) or losses.
-266.
+292.
 
 XRP investors stand to profit equally if XRPâ€™s popularity and price increase, and no
 
 investor will be entitled to a higher proportion of price increases. In other words, the price of XRP
 rises and falls for XRP investors together and equally for all investors.
-267.
+293.
 
 Moreover, Ripple pooled the funds it raised in the Offering and used them to fund
 
 its operations, including to finance building out potential â€œuseâ€ cases for XRP, paying others to
 assist it in developing a â€œuseâ€ case, constructing the digital platform it promoted, and compensating
 
-45
+51
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 46 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 52 of 79
 
 executives recruited for these purposes. Ripple did not segregate or separately manage proceeds
-from different XRP purchasers in the Offering. The nature of XRP itself made it the common
-thread among Ripple, its management, and all other XRP holders.
-268.
+from different XRP purchasers in the Offering, which Garlinghouse and Larsen knew or recklessly
+disregarded at all relevant times. The nature of XRP itself made it the common thread among
+Ripple, its management, and all other XRP holders.
+294.
 
 Defendants recognized and repeatedly emphasized these common interests to
 
 prospective investors, including by explaining to the market that Ripple used proceeds from XRP
 sales to fund its operations and that Ripple wanted XRP to succeed.
-269.
+295.
 
 For example, from the outset of Rippleâ€™s operations, Ripple Agent-1 and
 
 Cryptographer-1 made publicly clear that Ripple would sell XRP to raise funds for one common
 enterprise: to fund its operations, as described below.
-270.
+296.
 
 On March 10, 2013, Cryptographer-1 explained in the Ripple Forum on Rippleâ€™s
 
 website that Rippleâ€™s â€œsource of revenue is the sale of XRP.â€
-271.
+297.
 
 A few months later, on August 28, 2013, Ripple Agent-1 echoed that sentiment,
 
 stating that Ripple â€œwholesales XRP to fund operations.â€
-272.
+298.
 
 On September 2, 2013, Ripple Agent-1 again noted on the Ripple Forum that Ripple
 
 â€œis funded by investments and the sale of XRP.â€
-273.
+299.
 
 Similarly, the next year, in its 2014 Promotional Document, Ripple explained its
 
 â€œplans to retain 25% of all XRP issued to fund operations (and hopefully turn a profit).â€
-274.
+300.
 
 This public disclosure echoed Larsenâ€™s explanation, in an online interview dated
 
 April 14, 2014, that Ripple was â€œkeeping 25% of . . . XRP . . . to cover the bills.â€ When asked about
 Rippleâ€™s business model, Larsen reminded readers that Ripple was â€œkeeping 25% of those XRP, and
 using the rest of it to incent market makers, gateways, consumers to come onto the protocol.â€
-275.
 
-From at least 2014 through at least 2017, Ripple made a similar representation in the
+52
 
-Ripple Wiki: â€œRipple Labs sells XRP to fund its operations and promote the network. This allows
-Ripple Labs to have a spectacularly skilled team to develope [sic] and promote the Ripple protocol.â€
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 53 of 79
 
-46
+301.
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 47 of 71
+From at least 2014 through at least 2017, Ripple made a similar representation in the
 
-276.
+Ripple Wiki: â€œRipple Labs sells XRP to fund its operations and promote the network. This allows
+Ripple Labs to have a spectacularly skilled team to develope [sic] and promote the Ripple protocol.â€
+302.
 
 Ripple also made clear that the common interest was not just any interest, but a
 
 specific interest in XRPâ€™s price increasing, as Rippleâ€™s (significant) XRP holdings were essentially its
 only asset. For example, in his Ripple Forum post from September 2013, Ripple Agent-1 stated that
 Rippleâ€™s â€œbusiness model is to hold XRP in the hope that it will have value.â€
-277.
+303.
 
 At times, Ripple used the terms â€œvalueâ€ and â€œpriceâ€ interchangeably. In one early
 
@@ -2370,55 +2626,55 @@
 or something you care about as a primary driver of business.â€ Garlinghouse said: â€œ[A] healthy
 $XRP market and healthy $XRP ecosystem is CRITICALLY important to me. And it is indeed a
 primary driver. Long-term price will reflect success driving institutional use of $XRP.â€
-278.
+304.
 
 In 2014, the Promotional Document explained Rippleâ€™s view that, â€œas demand for
 
 XRP grows, the value of XRP should appreciateâ€ and that, therefore, â€œRipple Labs believes that its
 incentives are aligned with those of protocolâ€™s users.â€
-279.
+305.
 
 Cryptographer-1 has repeatedly and publicly expressed that Rippleâ€™s incentives are
 
 aligned with other XRP holdersâ€™â€”specifically, as to increasing Rippleâ€™s priceâ€”because Ripple
 â€œholds a huge pile of XRP,â€ including in a statement he made on XRP Chat on May 25, 2017.
-280.
+306.
 
 Garlinghouse in particular frequently encouraged investors to view their economic
 
 interests as aligned with Rippleâ€™s.
-281.
+
+53
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 54 of 79
+
+307.
 
 As alleged above, on January 17, 2018, Garlinghouse tweeted an article discussing
 
 Rippleâ€™s remaining supply of XRP. Garlinghouseâ€™s tweet noted that Ripple was not selling all of its
 remaining XRP supply, and that the article was â€œ[a] good read on why fostering a healthy $XRP
 ecosystem is a top priority at @Ripple.â€
-
-47
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 48 of 71
-
-282.
+308.
 
 The following month, in an interview on February 11, 2018, Garlinghouse
 
 acknowledged: â€œRipple the company, as the owner of 61% of the tokens today, is the most
 interested party in the success of the XRP ecosystem.â€
-283.
+309.
 
 Similarly, on March 7, 2018 in a CNBC interview, Garlinghouse stated: â€œThereâ€™s no
 
 party more interested in the success of the XRP ecosystem than Ripple. We want that to be
 massively successful because we own a lot of XRP.â€
-284.
+310.
 
 Garlinghouse publicly reiterated sentiments similar to these on March 7, 2018 in an
 
 interview with the Financial Times and again on August 13, 2020 in an interview with a major
 financial publication, where he said: â€œWe are a capitalist, we own a lot of XRP. So do I care about
 the overall XRP market? 100 per cent.â€
-285.
+311.
 
 On October 8, 2019 in a speech at the Economic Club of New York in Manhattan
 
@@ -2426,29 +2682,29 @@
 XRP. So clearly weâ€™re very interested in the health and success of that [XRP] ecosystem.â€ Asked
 about Rippleâ€™s â€œrevenue model,â€ he explained that while Ripple has software it sells, â€œit owns a lot
 of this digital assetâ€ and that â€œ[a]nything we do that is good for that digital asset is good for us.â€
-286.
+312.
 
 Currently, Ripple continues to make clear on its website that it holds at least 54
 
 billion XRP, making it by far the largest single holder of the asset.
-287.
+313.
 
 The Legal Memos focused on this very factâ€”the existence of an identifiable actor
 
 who held itself out as responsible for making efforts with respect to XRPâ€”in distinguishing XRP
 from bitcoin for purposes of the federal securities laws. The Legal Memos noted that, unlike with
+
+54
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 55 of 79
+
 bitcoin, there was â€œa specific entity,â€ Ripple, â€œwhich is responsible for the distribution of [XRP] and
 the promotion and marketing functions of the Ripple Network.â€
-288.
+314.
 
 At least one Ripple equity shareholder (â€œEquity Investor Aâ€), a sophisticated
 
 investor, understood this distinction. In an internal email on April 26, 2018, an Equity Investor A
-
-48
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 49 of 71
-
 employee wondered whether the XRP Ledger was subject to a â€œ51% attackâ€ (a threat to the status
 of the digital ledger), as he perceived the bitcoin blockchain to be. He concluded that it was â€œmore
 of a longer-term question given the current incentives of the stake holders,â€ meaning that Ripple
@@ -2459,7 +2715,7 @@
 Ripple Led Investors to Reasonably Expect a Profit from Their Investment
 Derived from Defendantsâ€™ Efforts
 
-289.
+315.
 
 Ripple also led investors to reasonably expect that they could reap a profit from their
 
@@ -2468,7 +2724,7 @@
 XRP; assuring investors that Ripple would take steps to protect the market for XRP, including by
 fostering a readily available XRP trading market; highlighting XRP price increases and at times tying
 them to Rippleâ€™s efforts; and selling XRP to certain institutional investors at discounted prices.
-290.
+316.
 
 Ripple made many of these statements in the Markets Reports, which typically
 
@@ -2479,31 +2735,31 @@
 Defendantsâ€™ Publicly Stated Goal Was to Increase â€œDemandâ€ for XRP Through Their
 Entrepreneurial and Managerial Efforts
 
-291.
+317.
 
 Throughout the Offering, as alleged in Section IV.A.1, above, Defendants repeatedly
 
 told investors that Rippleâ€™s XRP-related efforts were meant to spur â€œdemandâ€ for XRP. Ripple at
 times even explicitly tied the hope for an increase in demand to what any reasonable investor would
+
+55
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 56 of 79
+
 understand an increase in demand to entail: an increase in XRPâ€™s market price.
-292.
+318.
 
 Ripple made other such statements encouraging investors to expect to profit from
 
 Rippleâ€™s efforts to create institutional demand for XRP. For example, in response to questions
 about XRPâ€™s declining market price during a March 14, 2018 interview, Garlinghouse explained that,
-
-49
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 50 of 71
-
 if Ripple was â€œsuccessful in building out the project of xCurrent and expanding the number of users
 around xRapid, the price of XRP will take care of itself over a 3 to 5 year period.â€
 2.
 
 Ripple and Garlinghouse Assured Investors Ripple Would Protect the Trading Markets for XRP
 
-293.
+319.
 
 Ripple executives confirmed in internal emails that one of Rippleâ€™s goals in
 
@@ -2511,7 +2767,7 @@
 Markets Updateâ€ to certain Ripple executives, Ripple Agent-2 noted that â€œXRP activity in the last
 few days has been impressive, to say the least,â€ and that this activity â€œseems to be driven by
 speculation around the lockupâ€; and highlighted the 50% â€œrall[y]â€ in XRPâ€™s price after Ripple Agent2 publicly mentioned the possibility of the XRP Escrow for the first time.
-294.
+320.
 
 Ripple sought to assure investors that they could trust Ripple to protect the XRP
 
@@ -2525,34 +2781,34 @@
 
 Ripple and Garlinghouse Touted Investorsâ€™ Ability to Easily Buy and Sell XRP
 
-295.
+321.
 
 Related to Rippleâ€™s touting of its efforts to protect the trading markets for XRP,
 
 Ripple touted the ability of investors to buy and sell XRP on digital asset trading platforms (none of
 which had anything to do with â€œusingâ€ XRP in any way other than as a speculative vehicle).
-296.
 
-Ripple undertook extensive effortsâ€”starting in at least late 2015â€”to persuade digital
+56
 
-asset trading companies to permit investors to buy and sell XRP on their platforms, especially those
-that would make XRP tradable against the USD, as alleged in Section III.B.
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 57 of 79
 
-50
+322.
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 51 of 71
+Ripple undertook extensive effortsâ€”starting in at least late 2015â€”to persuade digital
 
-297.
+asset trading companies to permit investors to buy and sell XRP on their platforms, especially those
+that would make XRP tradable against the USD, as alleged in Section II.E.5 above.
+323.
 
-On May 18, 2017, Ripple Agent-3 tweeted: â€œKraken [a digital asset trading platform]
+On May 18, 2017, Ripple Agent-3 tweeted that â€œ[Platform B] [i]ntroduces New Fiat
 
-Introduces New Fiat Pairs for XRP Trading! USD, JPY, CAD, EUR @Ripple.â€
-298.
+Pairs for XRP Trading! USD, JPY, CAD, EUR @Ripple.â€
+324.
 
 In the Markets Report for the first quarter of 2017 Ripple touted another platformâ€™s
 
 â€œsuccessful launch of XRP for USD, EUR, and BTC currency pairsâ€ as a â€œbright spotâ€ for XRP.
-299.
+325.
 
 In a follow-up to his June 5, 2017 email described above, Garlinghouse
 
@@ -2562,7 +2818,7 @@
 Garlinghouse responded, among other things, that â€œfor XRP more specifically,â€ Ripple
 â€œannouncements about new exchanges listing XRP . . . continues to create tailwinds,â€ and that
 Ripple would continue making these efforts, â€œwhich should hopefully drive some tailwinds.â€
-300.
+326.
 
 On December 14, 2017, Garlinghouse stated on Rippleâ€™s YouTube Channel: â€œToday
 
@@ -2570,60 +2826,60 @@
 exchanges that are reputable and regulated in those appropriate markets. So it is a very high priority
 for us to be listed more broadly but you know weâ€™re going to continue working on that with
 partners around the globe.â€
-301.
+327.
 
 Ripple itself publicly noted the importance of XRP being traded on digital asset
 
 trading platforms. In articles published on its website on December 21, 2017 and January 18, 2018,
 Ripple noted: â€œ[I]tâ€™s a top priority for Ripple to have XRP listed on top digital asset exchanges. . . .
 Ripple has dedicated resources to the initiatives so you can expect ongoing progress.â€
-302.
+328.
 
 That day, Ripple also tweeted about â€œXRP Available on 50+ Exchanges.â€
 
+57
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 58 of 79
+
 4.
 
 Ripple and Garlinghouse Touted XRP as an Investment, Including by Highlighting XRP Price
 Increases
 
-303.
+329.
 
 Ripple and Garlinghouse also encouraged reasonable investors to view the purchase
 
 of XRP as something from which they could profit by persistently touting increases in XRPâ€™s price.
-51
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 52 of 71
-
-304.
+330.
 
 In a January 18, 2017 email, Garlinghouse told an XRP investor that â€œXRP had a
 
 good year in 2016â€”with significant increases in price and volumeâ€”which in turn has increased
 investor interest.â€
-305.
+331.
 
 On March 24, 2017, Ripple tweeted: â€œThe price of #XRP continues to surge
 
 showing that people are looking for #bitcoin alternatives.â€
-306.
+332.
 
 On May 3, 2017, Ripple tweeted: â€œ#Ripple adoption is sparking interest in XRP
 
 â€˜which has had an impressive rally in the last two monthsâ€™ via @Nasdaq.â€
-307.
+333.
 
 Two days later, on May 5, 2017, Cryptographer-1 tweeted, along with a picture of
 
 champagne, that he â€œfinally got to drink the champagne [he was] reserving for #XRP at $0.10.â€
-308.
+334.
 
 On June 29, 2017, Ripple tweeted a clip of an interview Garlinghouse gave on
 
 CNBC with the caption: â€œ#XRP â€“ up 4000% this year â€“ has shown the market favors a real use
 case for #digitalassets.â€ Garlinghouse also predicted that â€œdigital assets broadly are in a position to
 be more useful than gold as a value transferâ€ and described XRP as â€œsolving a real-world use case.â€
-309.
+335.
 
 In the Markets Report for the third quarter of 2017, published October 19, 2017,
 
@@ -2631,43 +2887,42 @@
 meaningful spike in XRPâ€ and that this rise in price lacked any â€œcorresponding rally in [bitcoin] and
 [the digital asset referred to as ETH],â€ noting that XRPâ€™s price was â€œat times overwhelmingly
 independentâ€ from that of bitcoin and ETH.
-310.
+336.
 
 On December 7, 2017, when the XRP Escrow began, Ripple tweeted: â€œ55B $XRP is
 
 now in escrow. Interested in what this means for $XRP markets?â€ Garlinghouse similarly tweeted:
 â€œBoom! 55B $XRP now in escrow. Good for supply predictability and trusted, healthy $XRP
+58
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 59 of 79
+
 markets. Glad to finally let this #cryptokitty out of the bag!â€
-311.
+337.
 
 A week later, on December 12, 2017, Garlinghouse retweeted Institutional Investor
 
 Câ€™s tweet: â€œWow, XRP at all time high! Forget bitcoin, weâ€™re all in on XRP!â€
-
-52
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 53 of 71
-
-312.
+338.
 
 Later that month, on December 22, 2017, Garlinghouse tweeted an article discussing
 
 how â€œRipple Soars at Year End,â€ with the caption â€œIâ€™ll let the headline speak for itself. $xrp.â€
-313.
+339.
 
 Ripple did not limit its touting of XRP purchases as a potential means for investors
 
 to profit only to increases in XRP prices in the abstract. Frequently, Ripple explicitly tied actual or
 potential XRP investment returns to Rippleâ€™s completed or upcoming effortsâ€”both with respect to
 developing demand for XRP and to protecting the XRP markets themselves.
-314.
+340.
 
 In connection with a significant rise in the price of XRP on March 23, 2017, Ripple
 
 explained in the Markets Report for the first quarter of 2017 that â€œkey [Ripple] developments may
 have had an impact[,]â€ including statements by Ripple â€œabout its commitment to XRP and the
 Ripple Consensus Ledger (RCL) as part of its long-term strategy.â€
-315.
+341.
 
 In the Markets Report for the second quarter of 2017, Ripple noted that various
 
@@ -2676,7 +2931,7 @@
 in the following quarter. Ripple also stated that â€œ[t]here were a number of significant
 announcements and events which clearly contributed to XRPâ€™s incredible second quarter,â€ reflected
 by a â€œstunning QoQ [price] increase of 1[,]159%â€ and â€œYTD [year to date] growth of 3[,]977%.â€
-316.
+342.
 
 Garlinghouse himself was a particularly persistent spokesperson for Rippleâ€™s efforts
 
@@ -2684,19 +2939,19 @@
 millions of XRP, Garlinghouse frequently told investors that he was invested in XRP, and that he
 was bullish on the investment. Throughout the Offering and as XRPâ€™s price fluctuated, he also
 encouraged investors to be patient and look at the price of XRP on a longer time horizon.
-317.
 
-For example, in the June 5, 2017 email described above, Garlinghouse noted that
+59
 
-Rippleâ€™s efforts to develop uses for XRP and the XRP Escrow had â€œtranslated into significant
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 60 of 79
 
-53
+343.
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 54 of 71
+For example, in the June 5, 2017 email described above, Garlinghouse noted that
 
+Rippleâ€™s efforts to develop uses for XRP and the XRP Escrow had â€œtranslated into significant
 improvements in both the liquidity (trading volume) and price of XRP,â€ which was â€œup
 approximately 500 percent in the last 30 days and over 5,000 percent from the beginning of 2017!â€
-318.
+344.
 
 In a follow-up to that email, an individual asked Garlinghouse to explain â€œwhat
 
@@ -2705,12 +2960,12 @@
 . . . as Ripple has done well in announcing customers â€“ that has driven market interest in buying
 XRP as a speculative investment.â€ He then gave examples of such Ripple announcements that were
 â€œcatalysts to this market rallyâ€ or that â€œfurthered the rally.â€
-319.
+345.
 
 Later, in a September 11, 2017 interview on CNBC, Garlinghouse noted Rippleâ€™s
 
 supposed success as a company and stated: â€œI think thatâ€™s increased the value of XRP.â€
-320.
+346.
 
 The following month, during an October 18, 2017, question-and-answer session at a
 
@@ -2720,7 +2975,7 @@
 stated, in response to a question about XRPâ€™s price, that he had â€œno qualms saying definitively if we
 continue to drive the success weâ€™re driving, weâ€™re going to drive a massive amount of demand for
 XRP, because weâ€™re solving a multi-trillion dollar problem.â€
-321.
+347.
 
 Similarly, in a November 2017 interview with CNBC, Garlinghouse noted: â€œOn a
 
@@ -2728,14 +2983,14 @@
 XRP.â€ He repeated the sentiment the following month, in a December 14, 2017 interview with
 Bloomberg News. When asked if he invested in XRP, he said: â€œIâ€™m long XRP, Iâ€™m very, very long
 XRP as a percentage of my personal . . . balance sheetâ€ (though he had already sold at least 67
-million XRP). Later, he reiterated, â€œI remain very, very, very long XRP, . . . Iâ€™m on the HODL
-side,â€ referring to a digital asset industry term meaning to be long on an asset for long-term gains.
 
-54
+60
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 55 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 61 of 79
 
-322.
+million XRP). Later, he reiterated, â€œI remain very, very, very long XRP, . . . Iâ€™m on the HODL
+side,â€ referring to a digital asset industry term meaning to be long on an asset for long-term gains.
+348.
 
 In a March 12, 2018 interview with Bloomberg News, Garlinghouse, noting the
 
@@ -2745,7 +3000,7 @@
 trillions of dollars, then there is a lot of opportunity to create value in XRP.â€ Garlinghouse also
 speculated in the December 14, 2017 interview that, if a company created â€œutilityâ€ for a digital asset
 like XRP, â€œthen there will be demand for the tokens, [and] the price of the tokens will go up.â€
-323.
+349.
 
 In the NYSE Interview, when the interviewer asked, â€œ[s]o, XRP, is that a good
 
@@ -2756,70 +3011,75 @@
 
 Rippleâ€™s Privately-Stated Goal Was to Increase Speculation on the Price of XRP
 
-324.
+350.
 
 As these public statements show, speculative investment in XRP was precisely what
 
 Ripple wanted and promotedâ€”it needed speculative investment for its own stated strategy to be
 successful and to increase the value of and monetize its XRP holdings.
-325.
+351.
 
 Ripple explicitly stated these goals internally, including in documents describing one
 
 of the reasons to establish the XRP Escrow as securing speculative liquidity, with the hopes that it
 would lead to â€œimmediate increase in volume and price appreciation.â€
-326.
+352.
 
 Ripple Agent-3â€™s March 31, 2017 â€œQ2 [second quarter] XRP Plan Updateâ€ email to
 
 Garlinghouse acknowledged that Ripple was taking most of the steps described above to encourage
 speculative investment in XRP. He also told Garlinghouse that â€œ[t]he goal [was] to drive XRP
 speculative trading volumeâ€ and that the â€œtacticsâ€ Ripple planned to undertake to do so included
-â€œescrow announcement,â€ â€œ[s]ign[ing] exchanges,â€ putting out information into the market to â€œtak[e]
-on skeptics,â€ and announcing business deals to â€œ[s]park speculation about potential partnerships.â€
 
-55
+61
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 56 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 62 of 79
 
+â€œescrow announcement,â€ â€œ[s]ign[ing] exchanges,â€ putting out information into the market to â€œtak[e]
+on skeptics,â€ and announcing business deals to â€œ[s]park speculation about potential partnerships.â€
 6.
 
 XRPâ€™s Characteristicsâ€”as Constructed by Rippleâ€”Reasonably Fueled Purchasersâ€™ Expectations
 of Profiting
 
-327.
+353.
 
 The very nature of XRP in the marketâ€”as constructed and promoted by Rippleâ€”
 
 compels reasonable XRP purchasers to view XRP as an investment.
-328.
+354.
 
 Except for certain trading volume limitations, XRP is freely transferable or tradeable
 
 without restrictions the moment it is purchased, and it was offered broadly and widely to all
 potential purchasers, not just those who might be reasonably expected to â€œuseâ€ XRP.
-329.
+355.
 
 Ripple made certain Institutional Sales of XRP at discounted priced, leading
 
 purchasers to reasonably expect to profit on their resale of XRP into the public markets.
-330.
+356.
 
 Moreover, the value of Rippleâ€™s current holdings of XRP (approximately $28 billion
 
-as of last week) and of XRPâ€™s total market capitalization of approximately $58 billionâ€”given that, as
-Garlinghouse has publicly stated, Ripple â€œwould not be profitable or cash flow positiveâ€ without
-selling XRPâ€”demonstrates that XRP investors are speculating that Ripple will achieve its stated
-goals with respect to XRP. In other words, market participants, when they buy XRP, are speculating
-that Rippleâ€™s economic incentives and its promises with respect to XRP will lead it to successfully
-solve the â€œtrillion-dollar problemâ€ that will increase demand for XRP.
-331.
+as of December 2020) and of XRPâ€™s then total market capitalization of approximately $58 billionâ€”
+given that, as Garlinghouse has publicly stated, Ripple â€œwould not be profitable or cash flow
+positiveâ€ without selling XRPâ€”demonstrates that XRP investors are speculating that Ripple will
+achieve its stated goals with respect to XRP. In other words, market participants, when they buy
+XRP, are speculating that Rippleâ€™s economic incentives and its promises with respect to XRP will
+lead it to successfully solve the â€œtrillion-dollar problemâ€ that will increase demand for XRP.
+357.
 
 As Garlinghouse summed it up in a December 29, 2017 interview with Bloomberg
 
 News, XRPâ€™s current market value and Rippleâ€™s holdings of XRP â€œgives [them] a huge strategic asset
 to go invest in and accelerate the vision we see for an internet of value. . . . For me this is all . . .
 about an opportunity to participate and accelerate a vision weâ€™ve had for some time.â€
+
+62
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 63 of 79
+
 V.
 
 In the Offering, Ripple Did Not Sell XRP for â€œUseâ€ or as â€œCurrencyâ€
@@ -2828,23 +3088,18 @@
 No Significant Non-Investment â€œUseâ€ for XRP Exists, and Ripple Did Not
 Sell XRP in the Offering for â€œUseâ€
 
-332.
+358.
 
 The first potential use that Defendants touted for XRPâ€”to serve as a â€œuniversal
 
 digital assetâ€ and/or for banks to transfer moneyâ€”never materialized.
-
-56
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 57 of 71
-
-333.
+359.
 
 Not until approximately mid-2018 did Ripple first begin earnestly testing ODLâ€”to
 
 date its only product that permits XRP use for any purpose. The potential â€œusersâ€ of ODL that
 Ripple is targeting are money transmitters.
-334.
+360.
 
 ODL involves a transaction in which a money transmitter in a senderâ€™s jurisdiction
 
@@ -2852,128 +3107,133 @@
 XRP into the fiat currency of that locale. Typically, instead of holding XRP directly, money
 transmitters who may use ODL would rely on market makers in the senderâ€™s and recipientâ€™s
 jurisdictions to trade in and out of XRP in about ninety seconds or less.
-335.
+361.
 
 ODL is an enterprise-grade software product intended for managing a financial
 
 institutionâ€™s daily and long-term treasury operationsâ€”it is not intended for individual use.
-336.
+362.
 
 On June 21, 2018, Garlinghouse explained in a public speech that nobody was using
 
 XRP to effect cross-border transactions as of that date. Instead, he said that Ripple â€œexpect[ed] this
 year for at least one bank to use XRP in their payment flows, to use xRapid [ODL].â€
-337.
+363.
 
 Ripple did not commercially launch ODL until October 2018.
 
-338.
+364.
 
 Since its launch, ODL has gained very little traction, in part due to certain costs of
 
 using the platform. From October 2018 through July 26, 2020, only fifteen money transmitters
 (none of which are banks) signed on to potentially use ODL, and ODL transactions comprised no
 more than 1.6% of XRPâ€™s trading volume during any one quarter (and often substantially less).
-339.
+365.
 
 Much of the onboarding onto ODL was not organic or market-driven. Rather, it
 
 was subsidized by Ripple. Though Ripple touts ODL as a cheaper alternative to traditional payment
+63
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 64 of 79
+
 rails, at least one money transmitter (the â€œMoney Transmitterâ€) found it to be much more expensive
 and therefore not a product it wished to use without significant compensation from Ripple.
-340.
+366.
 
 Between early 2019 and July 2020, the â€œMoney Transmitterâ€ conducted the
 
 overwhelming majority of XRP trading volume in connection with ODL. Ripple had to pay the
-
-57
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 58 of 71
-
 Money Transmitter significant financial compensationâ€”often paid in XRPâ€”in exchange for the
-Money Transmitterâ€™s agreement to help Ripple increase volume on ODL.4
-341.
+Money Transmitterâ€™s agreement to help Ripple increase volume on ODL. 4
+367.
 
 Specifically, from 2019 through June 2020, Ripple paid the Money Transmitter 200
 
 million XRP, which the Money Transmitter immediately monetized by selling XRP into the public
 market, typically on the very days it received XRP from Ripple. The Money Transmitter publicly
 disclosed earning over $52 million in fees and incentives from Ripple through September 2020.
-342.
+368.
 
 The Money Transmitter became yet another conduit for Rippleâ€™s unregistered XRP
 
 sales into the market, with Ripple receiving the added benefit that it could tout its inorganic XRP
 â€œuseâ€ and trading volume for XRP. The Money Transmitter has served that principal purpose for
 Ripple in exchange for significant financial compensation.
-343.
+369.
 
 Ripple and Garlinghouse did not disclose to XRP investors or the public the full
 
 extent of incentives that Ripple provided to the Money Transmitter in return for its assistance in
 increasing XRP trading volume.
-344.
+370.
 
 For example, in a September 12, 2019 interview on CNN, Garlinghouse refuted
 
 speculation that Ripple was manufacturing demand for ODL and claimed: â€œWhen [the Money
 Transmitter] is moving money from U.S. dollar to Mexican peso, theyâ€™re buying [XRP] at market.
 Thereâ€™s no special sweetheart deal there.â€ While the Money Transmitter was buying XRP in the
-market at current market prices (not from Ripple), Garlinghouse did not disclose that Ripple was
-paying the Money Transmitter significant financial incentives to do so.
-345.
-
-Even after ODLâ€™s launch, Ripple publicly acknowledged in July 2019 that XRP has
-
-no significant use beyond investment, as alleged in paragraph 211 above.
-
-4
 
 In June and November 2019, Ripple also made equity investments in the Money Transmitter
 totaling $50 million in exchange for its stock and a seat on its Board of Directors. Ripple currently
 holds approximately 9% of the Money Transmitterâ€™s publicly-traded stock.
-58
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 59 of 71
+4
 
-346.
+64
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 65 of 79
+
+market at current market prices (not from Ripple), Garlinghouse did not disclose that Ripple was
+paying the Money Transmitter significant financial incentives to do so.
+371.
+
+Even after ODLâ€™s launch, Ripple publicly acknowledged in July 2019 that XRP has
+
+no significant use beyond investment, as alleged in paragraph 236 above.
+372.
 
 Though it had started selling XRP to public investors in 2013, Ripple announced, for
 
 the first time in its history in 2020, that it began selling XRP directly to money transmitters
 specifically for effecting money transfers through ODL.
-347.
+373.
 
 From May through mid-August 2020, Ripple sold XRP to two other money
 
 transmitters for use in ODL for total proceeds of approximately $70 million dollars. In order to
 effectuate the ODL transaction, the money transmitters then immediately resold those XRP into the
 public markets, to individuals and entities that had no â€œuseâ€ for XRP.
-348.
+374.
 
 Ripple earns only de minimis fees from the ODL platform. Instead, Garlinghouse
 
 views â€œthe value creation of xRapid [ODL] as driving the liquidity in the XRP markets.â€
-349.
+375.
 
 Throughout the Offering, Defendants did not target sales of XRP to people to
 
 whom XRPâ€™s undeveloped, potential future â€œusesâ€ could reasonably be expected to appeal. For
 example, Defendants did not market XRP in the Offering to entities that might â€œuseâ€ XRP as a
 bridge currency or even to individuals who had a need for an alternative to fiat currency.
-350.
+376.
 
 Throughout the Offering, Defendants did not restrict sales of XRP to purchasers
 
 who would actually â€œuseâ€ XRP as a medium to execute cross-border transactions. Defendants
 offered, sold, and distributed XRP to investors worldwide, in any quantities and at various prices.
-351.
+377.
 
 Throughout the Offering, Defendants offered, sold, and distributed XRP in amounts
 
 that far exceeded any potential â€œuseâ€ of XRP as a medium to transfer value.
-352.
+
+65
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 66 of 79
+
+378.
 
 Defendants did not restrict the XRP they sold to money transmitters for use in ODL
 
@@ -2983,66 +3243,61 @@
 
 XRP Are Not â€œCurrencyâ€ Under the Federal Securities Laws
 
-353.
+379.
 
 In May 2015, Ripple and XRP II agreed (i) to settle charges brought by the United
 
 States Department of Justice and FinCEN for failing to register as a â€œMoney Services Businessâ€
-
-59
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 60 of 71
-
 under the Bank Secrecy Act and (ii) to comply with other regulatory requirements with respect to
 Rippleâ€™s XRP sales, which the settlement called â€œvirtual currency.â€
-354.
+380.
 
 Consequently, Ripple has at times suggested that XRP are not securities, but instead
 
 exempt from the Securities Act altogether as â€œcurrencies.â€
-355.
+381.
 
-XRP is not â€œcurrencyâ€ under the federal securities laws.5
+XRP is not â€œcurrencyâ€ under the federal securities laws. 5
 
-356.
+382.
 
 XRP has not been designated as legal tender in any jurisdiction. XRP is not issued
 
 by, nor is backed by the full faith and credit of, any country, national government, central bank, or
 other central monetary authority. A â€œnative currencyâ€ that operates, for example, on Rippleâ€™s
-decentralized network of blockchain technology is a specialized instrument for a particular computer
-network, not legal tender. Similarly, using XRP as a â€œbridgeâ€ between two real, fiat currencies does
-not bestow legal tender status on XRP.
-357.
+decentralized network of blockchain technology, is a specialized instrument for a particular
+computer network, not legal tender. Similarly, using XRP as a â€œbridgeâ€ between two real, fiat
+currencies does not bestow legal tender status on XRP.
+383.
 
 Moreover, Ripple has never offered or sold XRP as â€œcurrency,â€ as that term is used
 
 in the federal securities laws. Throughout the Offering, Ripple never restricted offers or sales of
+
+FinCEN has repeatedly reiterated its view that â€œvirtual currencyâ€ that may be converted for
+traditional fiat currencies may still be subject to the federal securities laws â€œregardless of other
+intended purposesâ€ for the convertible virtual currency. See, e.g., FinCEN Guidance, Application of
+FinCENâ€™s Regulations to Certain Business Models Involving Convertible Virtual Currencies, FIN2019-G001 (May 9, 2019) available at https://www.fincen.gov/sites/default/files/201905/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf.
+5
+
+66
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 67 of 79
+
 XRP solely to purchasers who had a need for alternatives to traditional, fiat currencies, nor did
 Ripple promote XRP as an instrument for consumers to purchase goods or services.
-358.
+384.
 
 Instead, Ripple and its executives repeatedly publicly disclaimed that XRP was
 
 â€œcurrencyâ€ and tried to dissuade investors from thinking about XRP as â€œcurrency.â€
-359.
+385.
 
 For example, in June 2016, Cryptographer-1 explained in a public XRP Chat post:
 
 â€œWe do not plan to encourage use of XRP as an alternative to Bitcoin or as a direct payment
 method at this time.â€
-
-5
-
-FinCEN has repeatedly reiterated its view that â€œvirtual currencyâ€ that may be converted for
-traditional fiat currencies may still be subject to the federal securities laws â€œregardless of other
-intended purposesâ€ for the convertible virtual currency. See, e.g., FinCEN Guidance, Application of
-FinCENâ€™s Regulations to Certain Business Models Involving Convertible Virtual Currencies, FIN2019-G001 (May 9, 2019) available at https://www.fincen.gov/sites/default/files/201905/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf.
-60
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 61 of 71
-
-360.
+386.
 
 Two years later, in a press conference on March 14, 2018, Garlinghouse stated:
 
@@ -3052,7 +3307,7 @@
 something you can use to transact efficiently and broadly. Very few people,
 even in the crypto community have used the, you know, Bitcoin or XRP to
 buy something.
-361.
+387.
 
 Similarly, in Garlinghouseâ€™s Economic Club Speech in October 2019, a moderator
 
@@ -3061,11 +3316,11 @@
 use case today. . . . [W]hen people talk about using crypto for consumer use case I go to the â€˜well
 what problem are we trying to solve?â€™ . . . [I]n first world countries like the United States . . . I donâ€™t
 see the consumer use for crypto any time soon,â€ or even for â€œ95% of global GDP.â€
-362.
+388.
 
 Rippleâ€™s own current internal policies treat XRP as securitiesâ€”not currency.
 
-363.
+389.
 
 Since at least 2015, Rippleâ€™s internal â€œCode of Conductâ€ has directed Ripple
 
@@ -3073,41 +3328,42 @@
 or the Ripple protocol that has not been publicly announced, and which might reasonably affect the
 decision to buy or sell XRPâ€â€”effectively, a prohibition against insider trading, applicable to
 securities under the federal securities laws.
-364.
+
+67
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 68 of 79
+
+390.
 
 Similarly, since at least July 2019, Ripple has banned certain members of its
 
 â€œleadership teamâ€ from entering into a â€œtrading planâ€ for XRP â€œon the basis of information a
 reasonable person would consider important in making his or her decision to purchase, hold or sell
 XRPâ€â€”another implicit reference to rules governing insider trading.
-365.
+391.
 
 Even if some country were to recognize XRP as fiat â€œcurrencyâ€ at some point in the
 
 future, that would result from Defendantsâ€™ significant entrepreneurial and managerial efforts to date
 (and likely in the future), on which public investors expecting profit relied when making an
 investment of money into Defendantsâ€™ common enterprise.
-61
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 62 of 71
-
 VI.
 
 Defendants Failed to Register the Offering with the SEC
-366.
+392.
 
 Defendants used interstate commerce for the Offering by, among other things,
 
 promoting investments in XRP in emails, interviews disseminated to the public through television
 and the Internet, and publicly available social media applications; and by effecting transfers of XRP
 and of the Offering proceeds through global digital asset trading platforms.
-367.
+393.
 
 Defendants have never filed a registration statement with the SEC with respect to
 
 any XRP they have offered or sold or intend to offer or sell, and no registration statement has ever
 been in effect with respect to any offers or sales of XRP.
-368.
+394.
 
 Rippleâ€™s public disclosures contained selective or no information about Rippleâ€™s
 
@@ -3118,6 +3374,11 @@
 operations, financial condition, or other factors relevant in considering whether to invest in XRP.
 XRP investors have also been deprived of information about how Rippleâ€™s executives are being
 compensated as a result of the Offering or about Rippleâ€™s use of funds derived from the sale of
+
+68
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 69 of 79
+
 XRP. Nor have investors received complete information about any steps Ripple is taking to
 incentivize financial institutions to adopt XRP for use in a payment system, including the extent and
 nature of incentive payments made to businesses Ripple touts as market-driven â€œusersâ€ of its
@@ -3125,11 +3386,6 @@
 XRP purchasers and the market lack information that issuers provide under the Securities Act and
 the Exchange Act when they solicit public investment and foster a secondary market when their
 securities are publicly traded.
-
-62
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 63 of 71
-
 VII.
 
 Larsen and Garlinghouse Knowingly or Recklessly Provided Substantial Assistance
@@ -3139,16 +3395,16 @@
 Larsen Assumed the Risk that XRP Could Be a Security and Pushed the
 Offering Forward
 
-369.
+395.
 
 Ripple and Larsen knew that XRP may be a security from the onset of the Offering
 
-and simply ignored legal requirements regarding registration and required periodic and current
-public disclosures. As described above in Section I.B, above, the Legal Memos Ripple
-commissioned in February and October 2012 warned that there was some risk that XRP would be
-considered an â€œinvestment contractâ€ (and thus a security under the federal securities laws)
-depending on various factors.
-370.
+but disregarded legal requirements regarding registration and required periodic and current public
+disclosures. As described above in Section I.B, above, the Legal Memos Ripple commissioned in
+February and October 2012 warned that there was some risk that XRP would be considered an
+â€œinvestment contractâ€ (and thus a security under the federal securities laws) depending on various
+factors.
+396.
 
 Although both the February 2012 and the October 2012 Legal Memos warned that,
 
@@ -3158,13 +3414,18 @@
 stewardship, Ripple promoted XRP as a speculative investment when either no use case existed or,
 with the eventual development of the ODL product, only a small fraction of XRP arguably was
 being â€œusedâ€ for a few moments for non-investment purposes before being sold to investors.
-371.
+
+69
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 70 of 79
+
+397.
 
 Larsen understood that investors were purchasing XRP as an investmentâ€”precisely
 
 the situation that both the February 2012 and the October 2012 Legal Memos had warned could
 lead to a determination that XRP was a security.
-372.
+398.
 
 For example, on February 6, 2017, â€œan early investor in XRPâ€ wrote Larsen to
 
@@ -3172,22 +3433,42 @@
 connecting banks serves . . . emerging trendsâ€ such that â€œthe more banks that connect thru Ripple
 . . . the more demand we should see for XRP as an asset to reduce liquidity costs.â€ Acknowledging
 the investorsâ€™ â€œconcerns around the current state of volume flowsâ€ for XRP, Larsen concluded:
-
-63
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 64 of 71
-
 â€œFrankly, the entire industry is really in the earliest stages of developments. Most volume in the
 space is speculation in advance of enterprise and eventually consumer flows.â€
-373.
+399.
 
 Larsen also received additional warnings that XRP could be subject to the federal
 
-securities laws. On January 5, 2015, the head of an entity establishing a fund to invest in XRP
+securities laws, including because XRP was not a â€œcurrencyâ€ and because, even if it was, it could still
+be a security under the federal securities laws.
+400.
+
+On November 11, 2013, Rippleâ€™s accountants sent Larsen a draft memo regarding
+
+certain United States taxation considerations for Ripple and XRP. The memo explained that XRP
+was likely not currency under federal income tax laws, principally because XRP â€œis not considered
+legal tender in the U.S.â€ The memo also explained to Larsen that â€œâ€˜virtualâ€™ currencyâ€ like XRP was
+not traditional currency under FinCEN guidance issued on March 18, 2013 for the same reasonâ€”
+namely, that XRP was not legal tender in any jurisdiction.
+401.
+
+On January 5, 2015, the head of the entity looking to establish XRP Fund A
+
 forwarded to Larsen an email from the fundâ€™s attorney, who worked at a prominent global law firm.
 The attorneyâ€™s email advised that, while the attorney did not know â€œwhether a virtual currency is
 itself a security[,] . . . one certainly can create a security by packaging virtual currency.â€
-374.
+
+70
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 71 of 79
+
+402.
+
+On March 9, 2016, while Larsen was CEO, Rippleâ€™s attorneys wrote to the NYDFS
+
+stating that â€œXRP II and Ripple consider XRP a digital asset, not a currencyâ€ and that â€œXRP is not
+intended to be used as a currency.â€
+403.
 
 Including as described above in this Complaint, Larsen provided substantial
 
@@ -3200,130 +3481,200 @@
 Garlinghouse Was Warned and Understood That XRP Had â€œSecurities-Typeâ€
 Characteristics
 
-375.
+404.
 
-By at least June 2017, Garlinghouse knew or recklessly disregarded that Rippleâ€™s
+By at least June 2015, Garlinghouse knew or recklessly disregarded that Rippleâ€™s
 
 offers and sales of XRP were part of the offer and sale of an investment contract and thus a security.
-376.
+405.
 
-For example, in an email conversation between Garlinghouse and Ripple Agent-1 on
+From the outset of his employment at Ripple, Garlinghouse was involved in
 
-June 2015, Ripple Agent-1 expressed a desire to maintain a Ripple trading platform to specifically
-and uniquely target â€œnon-consumer[s].â€ In response, Garlinghouse told Ripple Agent-1 it was â€œnot
-clear to [him] . . . how one would reasonably discern (through an online process) between a
-speculator and a consumer.â€ In essence, Garlinghouse conveyed that Ripple was then already
-unable to distinguish between sales it made to speculators and to â€œconsumers.â€
-377.
+decisions regarding offers and sales of XRP and understood, at all relevant times, that sales of XRP
+drove Rippleâ€™s revenues and that, as reflected in his numerous public statements, the digital asset
+space entails risks relating to the application of the federal securities laws.
+406.
+
+Moreover, in an email conversation between Garlinghouse and Ripple Agent-1 on
+
+June 2015, Ripple Agent-1 conveyed to Garlinghouse Larsenâ€™s desire to maintain a Ripple trading
+platform to specifically and uniquely target â€œnon-consumer[s].â€ In response, Garlinghouse told
+Ripple Agent-1 it was â€œnot clear to [him] . . . how one would reasonably discern (through an online
+process) between a speculator and a consumer.â€ In essence, Garlinghouse conveyed that Ripple was
+then already unable to distinguish between sales it made to speculators and to â€œconsumers.â€
+407.
 
 On March 11, 2017, Rippleâ€™s then-chief compliance officer explained to
 
 Garlinghouse in an email that â€œXRP certainly has some â€˜securities-typeâ€™ characteristics and we do
 need to hone our playbook/messaging.â€
-64
+71
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 65 of 71
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 72 of 79
 
-378.
+408.
 
 On April 16, 2017, Garlinghouse was similarly advised by e-mail that the same chief
 
 compliance officer â€œwant[ed] to make sure the verbiage [in employee offer letters regarding XRP
 notional value] doesnâ€™t put us at risk of XRP sounding like a security.â€
-379.
+409.
 
 Garlinghouse, demonstrating a keen interest in the regulatory status of digital assets,
 
 also commented on Rippleâ€™s website immediately after the SEC issued the DAO Report in July 2017:
 â€œI say, if it looks like a duck and quacks like a duck then letâ€™s regulate it like a duck.â€
-380.
+410.
 
 Garlinghouse nevertheless continued to make XRP sound like a security, including in
 
 interviews later in 2017 boasting about being â€œvery longâ€ XRP and in comments in connection with
 the XRP Escrow about how Rippleâ€™s efforts were meant to stabilize XRPâ€™s price.
-381.
+411.
+
+On December 11, 2017, Rippleâ€™s public relations firm emailed Garlinghouse to
+
+notify him that they wanted to â€œcall . . . outâ€ a recent statement by the then-SEC Chairman that
+â€œ[m]erely calling a token a â€˜utilityâ€™ token or structuring it to provide some utility does not prevent the
+tokenâ€ from being a security, given that it â€œhad been a concern to have XRP considered a security.â€
+412.
 
 The following year, in January 2018, Garlinghouse again demonstrated he
 
 understood at least certain factors that could determine whether XRP could be deemed a security.
 Only weeks after he touted being â€œvery longâ€ XRP in interviews, he commented, on an internal
 Ripple draft document, that XRP should not be promoted as an investment.
-382.
+413.
 
 The following month, in a Yahoo! Finance interview he gave in February 2018,
 
 Garlinghouse acknowledged his understanding that â€œif there is not a real use case then itâ€™s really a
 securities offering. And if itâ€™s a securities offering thereâ€™s not regulatory uncertainty. It should be
 regulated as a securities offering.â€ At that time, Garlinghouse knew or recklessly disregarded that
-none of Rippleâ€™s sales of XRP up to that point had been with respect to any â€œuseâ€ of XRP.
-383.
+none of Rippleâ€™s sales of XRP up to that point had been with respect to any â€œuseâ€ of XRP. In this
+interview, Garlinghouse also characterized â€œpeople in the crypto space talking about â€˜regulatory
 
-Garlinghouse also admitted in a non-public setting that he is cognizant of the risk
+72
 
-that XRP could be â€œclassified as a security.â€ Specifically, as reflected in an Equity Investor A
-employee email, dated July 23, 2018, Garlinghouse (accompanied by Larsen) met with Equity
-Investor A, â€œspoke for a while on the outstanding issue of whether XRP gets classified as a
-security,â€ and noted that, while he was â€œoptimistic thatâ€ it would not, he could â€œ[]not guarantee
-that.â€
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 73 of 79
 
-65
+uncertaintyâ€™â€ by saying â€œmore often than not that means â€˜I disagree with the regulatory certainty so
+Iâ€™m going to call it regulatory uncertainty.â€™â€
+414.
 
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 66 of 71
+On January 11, 2018, Garlinghouse signed Rippleâ€™s application to seek Platform A to
 
-384.
+make XRP available for trading. The application represented that â€œ[w]e understand that whether or
+not a digital asset may be considered a security is an important consideration for many in the digital
+asset ecosystemâ€ and stated that Ripple had â€œreceived a legal memorandum from a reputable law
+firmâ€ regarding the status of XRP under the federal securities laws.
+415.
+
+Platform A was one of at least four platforms incorporated in the United States that
+
+asked Ripple for a legal opinion as to the status of XRP under the federal securities laws. At least
+one such platform declined to make XRP available for trading due to Rippleâ€™s failure to provide
+such an opinion, as Ripple Agent-2 informed Garlinghouse and Larsen in a July 14, 2018 email.
+416.
+
+As alleged in Section II.E.5 and herein, Garlinghouse actively participated in Rippleâ€™s
+
+efforts to make XRP available on these platforms from the outset of his tenure at Ripple and was
+therefore aware that the status of XRP under the federal securities laws was important to these
+United States-based platforms. More specifically, Garlinghouseâ€™s participation in these processes
+made him aware that, if there was a market or independent legal consensus that XRP is a security
+under the federal securities laws, United States-based platforms would question whether to allow
+XRP to be traded on their platforms.
+417.
+
+As also alleged in Section II.E.5, Garlinghouse understood that Rippleâ€™s ability to sell
+
+XRP on these platforms was critical to its ability to capitalize its operations. Garlinghouse
+understood that Ripple is not profitable and cannot operate without continued sales of XRP because
+such sales are Rippleâ€™s â€œrevenue driver,â€ as he has publicly stated.
+418.
+
+For example, in an April 10, 2018 email, a Ripple employee told Garlinghouse that
+
+Platform A was â€œhesitant to list XRPâ€ precisely because of the â€œregulatory uncertaintyâ€ that XRP
+
+73
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 74 of 79
+
+could be deemed a security. The employee further informed Garlinghouse that, for that reason,
+Platform A had declined Rippleâ€™s request that Platform A tell the press that regulatory uncertainty
+had not factored into Platform Aâ€™s decision not to make XRP available.
+419.
+
+In his April 11, 2018 response, Garlinghouse demonstrated his understanding that
+
+â€œregulatory uncertaintyâ€ about the status of XRP could hurt Rippleâ€™s XRP trading strategy (including
+making it available on digital asset trading platforms for speculators) and sought to dispel such
+concerns. Garlinghouse stated that, while he was â€œnot exactly â€˜okâ€™ withâ€ Platform Aâ€™s proposed
+response to the press, he thought it â€œachieve[d] our primary goal of dispelling the BS that
+Bloomberg put out there that [Platforms A and C] are hesitant to list XRP because of concerns
+about it being a security.â€
+420.
+
+Garlinghouse again admitted in a non-public setting that he is cognizant of the risk
+
+that XRP could be â€œclassified as a securityâ€ to Equity Investor A. Specifically, as reflected in an
+Equity Investor A employee email, dated July 23, 2018, Garlinghouse (accompanied by Larsen) met
+with Equity Investor A, â€œspoke for a while on the outstanding issue of whether XRP gets classified
+as a security,â€ and noted that, while he was â€œoptimistic thatâ€ it would not, he could â€œ[]not guarantee
+that.â€
+421.
 
 In a speech he gave in Manhattan in October 2019, Garlinghouse further
 
 acknowledged that people are â€œspeculating on digital assetsâ€ and that â€œ99.9% of all crypto trading
 today is just speculation,â€ a factor he knew could lead to a determination that XRP was a security.
-385.
+422.
 
 Throughout the course of this conduct, Garlinghouse had an incentive to make
 
-efforts to increase XRPâ€™s trading price and volume. Pursuant to an options grant of up to 500
-million XRP dated December 13, 2016, Ripple would pay Garlinghouse in XRP, only if the volume
-weighted average price of XRP was â€œat least $0.02/XRPâ€ for four consecutive weeks and the weekly
-XRP trading volume was at least 1.4 billion for at least four consecutive weeks.
-386.
+efforts to increase XRPâ€™s trading price and volume, including to obtain more favorable prices for the
+sale of his own XRP and Rippleâ€™s. Moreover, pursuant to an options grant of up to 500 million
+XRP dated December 13, 2016, Ripple would pay Garlinghouse in XRP, only if the volume
 
-Garlinghouse understands that Ripple is not profitable and cannot operate without
+74
 
-continued sales of XRP, as he has publicly stated.
-387.
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 75 of 79
+
+weighted average price of XRP was â€œat least $0.02/XRPâ€ for four consecutive weeks and the weekly
+XRP trading volume was at least 1.4 billion for at least four consecutive weeks.
+423.
 
 From April 2015 to the present, Garlinghouse provided substantial assistance to
 
 Ripple in conducting its Offering.
-388.
+424.
 
 In addition to making the various promotional statements and efforts described
 
 above in this Complaint, Garlinghouse, as both COO and later CEO, participated in weekly XRP
-sales meetings where he exercised final decision-making authority over the timing and amount of
-Rippleâ€™s XRP sales, including whether to adjust Rippleâ€™s XRP sales based on factors such as market
-conditions, volume, price, or the capital needs of the company.
-389.
+sales meetings where he exercised decision-making authority (including final decision-making
+authority as CEO) over the timing and amount of Rippleâ€™s XRP sales. Garlinghouseâ€™s decisions
+included whether to adjust Rippleâ€™s XRP sales based on factors such as market conditions, volume,
+price, or the capital needs of the company.
+425.
 
 Garlinghouse similarly exercised final decision-making authority over how much
 
 XRP Ripple would offer and sell on a daily basis.
-390.
+426.
 
-Garlinghouse also made the decision to establish the XRP Escrow and approved
+Garlinghouse also made the decision to establish the XRP Escrow and, as alleged,
 
-paying XRP as incentives to digital asset trading platforms for â€œlistingâ€ XRP or achieving certain
-trading volume benchmarks.
-391.
+approved paying XRP as incentives to digital asset trading platforms for â€œlistingâ€ XRP or achieving
+certain trading volume benchmarks.
+427.
 
 Garlinghouse acted at least recklessly while engaging in this conduct.
-
-66
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 67 of 71
-
 TOLLING AGREEMENTS
-392.
+
+428.
 
 Ripple and the SEC entered into tolling agreements suspending the running of any
 
@@ -3331,20 +3682,25 @@
 September 7, 2019, from September 8, 2019 through December 8, 2019, from December 9, 2019
 through June 8, 2020, from June 9, 2020 through December 9, 2020, and from December 10, 2020
 through December 24, 2020.
-393.
+429.
 
 Larsen and the SEC entered into a tolling agreement suspending the running of any
 
 applicable statute of limitations from September 1, 2020, through December 31, 2020.
+
+75
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 76 of 79
+
 FIRST CLAIM FOR RELIEF
 Violations of Sections 5(a) and 5(c) of the Securities Act
 (All Defendants)
-394.
+430.
 
 The Commission realleges and incorporates by reference here the allegations in
 
-paragraphs 1 through 393.
-395.
+paragraphs 1 through 429.
+431.
 
 By virtue of the foregoing, (a) without a registration statement in effect as to that
 
@@ -3354,7 +3710,7 @@
 of transportation or communication in interstate commerce or of the mails to offer to sell through
 the use or medium of a prospectus or otherwise, securities as to which no registration statement had
 been filed.
-396.
+432.
 
 Ripple violated Sections 5(a) and 5(c) of the Securities Act by conducting the
 
@@ -3362,14 +3718,9 @@
 directly and indirectly making use of the means and instruments of transportation or
 communications in interstate commerce or of the mails to sell 14.6 billion XRP without a
 registration statement in effect as to XRP, and by making use of the means and instruments of
-
-67
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 68 of 71
-
 transportation or communication in interstate commerce or of the mails to offer to sell XRP, which
 were offered and sold as securities, as to which no registration statement had been filed.
-397.
+433.
 
 Larsen violated Sections 5(a) and 5(c) of the Securities Act by, from 2013 through
 
@@ -3378,17 +3729,22 @@
 statement in effect as to XRP, and by making use of the means and instruments of transportation or
 communication in interstate commerce or of the mails to offer to sell XRP, which were offered and
 sold as securities, as to which no registration statement had been filed.
-398.
+
+76
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 77 of 79
+
+434.
 
 Garlinghouse violated Sections 5(a) and 5(c) of the Securities Act by, from 2016
 
 through the present, directly and indirectly making use of the means and instruments of
-transportation or communications in interstate commerce or of the mails to sell 321 million XRP
+transportation or communications in interstate commerce or of the mails to sell 357 million XRP
 without a registration statement in effect as to XRP, and by making use of the means and
 instruments of transportation or communication in interstate commerce or of the mails to offer to
 sell XRP, which were offered and sold as securities, as to which no registration statement had been
 filed.
-399.
+435.
 
 By reason of the conduct described above, Defendants, directly or indirectly,
 
@@ -3397,36 +3753,36 @@
 SECOND CLAIM FOR RELIEF
 Aiding and Abetting Violations of Securities Act Sections 5(a) and 5(c)
 (Larsen and Garlinghouse)
-400.
+436.
 
 The Commission realleges and incorporates by reference here the allegations in
 
-paragraphs 1 through 393.
-401.
+paragraphs 1 through 429.
+437.
 
 By engaging in the acts and conduct described in this Complaint, Defendants Larsen
 
 and Garlinghouse, directly or indirectly, knowingly or recklessly provided substantial assistance to
-
-68
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 69 of 71
-
 Ripple, who, from 2013 through the present, directly and indirectly have made and are making use
 of the means and instruments of transportation or communications in interstate commerce or of the
 mails to sell 14.6 billion XRP without a registration statement in effect as to XRP, and by making
 use of the means and instruments of transportation or communication in interstate commerce or of
 the mails to offer to sell XRP, which were offered and sold as securities, as to which no registration
 statement had been filed.
-402.
+438.
 
 Larsen knowingly or recklessly provided substantial assistance to Rippleâ€™s violations
 
-of Sections 5(a) and 5(c) of the Securities Act including by: (i) from 2013 to 2016, deciding when and
-how much XRP Ripple would sell, establishing the XRP Escrow, making promotional statements
-with respect to XRP, and spearheading Rippleâ€™s efforts to attempt to increase demand for XRP; and
-(ii) from 2015 to the present, making his own sales of XRP.
-403.
+of Sections 5(a) and 5(c) of the Securities Act including by, from 2013 to the present, deciding when
+
+77
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 78 of 79
+
+and how much XRP Ripple would sell, establishing the XRP Escrow, making promotional
+statements with respect to XRP, spearheading Rippleâ€™s efforts to attempt to increase demand for
+XRP, and making his own sales of XRP.
+439.
 
 Garlinghouse knowingly or recklessly provided substantial assistance to Rippleâ€™s
 
@@ -3434,7 +3790,7 @@
 deciding when and how much XRP Ripple would sell, establishing the XRP Escrow, making
 promotional statements with respect to XRP, spearheading Rippleâ€™s efforts to attempt to increase
 demand for XRP, and making his own sales of XRP.
-404.
+440.
 
 By reason of the foregoing, Larsen and Garlinghouse are liable pursuant to Section
 
@@ -3444,21 +3800,22 @@
 PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that the Court enter a Final
 Judgment:
-
-69
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 70 of 71
-
 I.
 Permanently enjoining Defendants, and each of their respective agents, servants, employees,
 attorneys and other persons in active concert or participation with any of them, from violating,
 directly or indirectly, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. Â§ 77e(a), 77e(c)],
 including by delivering XRP to any persons or taking any other steps to effect any unregistered offer
 or sale of XRP;
+
+78
+
+Case 1:20-cv-10832-AT Document 46 Filed 02/18/21 Page 79 of 79
+
 II.
 Ordering Defendants to disgorge all ill-gotten gains obtained within the statute of
 limitations, with prejudgment interest thereon, pursuant to Section 21(d)(5) of the Exchange Act
-[15 U.S.C. Â§ 78u(d)(5)];
+[15 U.S.C. Â§ 78u(d)(5)] and Sections 6501(a) and (b) of the National Defense Authorization Act for
+Fiscal Year 2021, Pub. L. 116-283, 134 Stat. 3388 (Jan. 1, 2021);
 III.
 Prohibiting Defendants from participating in any offering of digital asset securities pursuant
 to Section 21(d)(5) of the Exchange Act [15 U.S.C. Â§ 78u(d)(5)];
@@ -3468,35 +3825,30 @@
 V.
 Granting any other and further relief this Court may deem just and proper for the benefit of
 investors.
-
-70
-
-Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 71 of 71
-
 JURY DEMAND
 The Commission demands a trial by jury.
 Dated: New York, New York
-December 22, 2020
+February 18, 2021
+
+/s/ Richard Best
 ________________________________
-Richard R. Best
-Preethi Krishnamurthy
+Richard Best
 Jorge G. Tenreiro
 Dugan Bliss
 Attorneys for Plaintiff
 SECURITIES AND EXCHANGE
 COMMISSION
-New York Regional Office
-Brookfield Place
+New York Regional Office - Brookfield Place
 200 Vesey Street, Suite 400
 New York, New York 10281-1022
 (212) 336-9145 (Tenreiro)
 Email: TenreiroJ@sec.gov
+
 Of Counsel
-Kristina Littman
-John O. Enright
+Preethi Krishnamurthy
 Daphna A. Waxman
-Jon Daniels
+Jon A. Daniels
 
-71
+79
 
 
\ No newline at end of file

Has Tiffany Hayden been spreading FUD lately?

2020-02-10T21:27:00.002-08:00

After a discussion with her, my conclusion is that there is a chance that she genuinely believes that she is not spreading FUD. But it's also not hard to see why many people see it that way.

The discussion happened here:

Something has happened to @haydentiff. This is for sure. I don't know what it is though. If this is not fear-mongering, I don't know what fear-mongering is. First, why would Ripple abandon XRP. Second, no validator would do that because it won't work. https://t.co/g6CDp1Gkiq
— r0bertz (@r0bertz) February 10, 2020

The initial tweet reflected my thought at the time I was posting the tweet. I am not going to change it.

So now let me summary how it went.

In the so called "FUD" tweet, Tiffany described a scenario "If Ripple abandoned XRP, the validators would vote to increase reserve to 25K XRP to freeze almost everyone else so we could cash out first".

My response was:

Ripple won't abandon XRP because it has every incentive to keep XRP but no incentive to abandon it.

Below are our message exchanges about this. My thoughts are in parenthesis.

Tiffany: It's incorrect to assume that Ripple would take care of things.

Robert: It's not Ripple taking care of things, but taking care of itself.

Tiffany: Ripple continues to remove validators from the network and has a goal to go down to one or even zero. (As if this is an example that Ripple doesn't take care of things and that Ripple is abandoning XRP)

Robert: This is a serious allegation (I mean the part that Ripple has a goal to go down to one or even zero). And if it's a goal, it should be either one or zero, not "one or even zero".

Nik: Ripple has a goal to go down to one validator.

Robert: I am not worrying too much about this as long as Ripple keeps hiring an excellent team to work on rippled and it would be stupid for Ripple to give up this team.

Nik: Although Ripple has a large and highly skilled team dedicated to development of rippled, I’d prefer to see more external contributors. (I read this as Ripple is still committed to XRP.)

Freezing everyone else by increasing reserve so that they could cash out first won't work.

Things got heated up on this one. I will only give a high level summary.

So in the beginning, I assumed that increasing reserve to any amount would always require an amendment and that someone must send a pull request for this amendment to https://github.com/ripple/rippled to get it merged. If anyone does this, I would know because I follow what's happening there. If this pull request gets merged, people with less than 25k in their accounts would start moving their fund immediately. No one will be freezed.

To my surprise, it seemed that Tiffany didn't know how rippled development works, or rather how github projects work in general. It didn't take too long for me to realize that what she really meant may be that the validators can collude privately and thus don't need github.

Then this still can be undone. Because it's easy to create a fork and getting it recognized by the world is going to be easy too, because the old UNL betrayed the world. See this article for technical details https://r0bertz.blogspot.com/2017/07/several-possible-attack-modes-on-xrp.html

Later XRP Scan pointed out that reserve can be increased to 4294 XRP without introducing an amendment. But 4294 is not a too big number. To increase it to 25k, an amendment is still required. Either way, it can be undone.

ripple-client-desktop ported to RippleAPI

2020-02-04T20:19:00.002-08:00

Disclaimer: this work is provided "as-is" and is not endorsed by or affiliated with Ripple Inc. in anyway.

RippleAPI was one of the APIs (the other one is core API) in ripple-lib before version 0.13.0 which was released in 2015 and has been the only API since 0.13.0.

ripple-client-desktop was abandoned by Ripple Inc. in 2015. By the time it was abandoned, it could only work with core API.

I started porting it to RippleAPI in late 2018. The progress was recorded in this twitter thread:

This weekend I tried to revive ripple-client-desktop. l I have reached a point at which I can run gulp without any warning on the command line. However, the app stuck at loading. Then I figured out that the client uses an ancient ripple-lib API.
— r0bertz (@r0bertz) December 17, 2018

You can download the executable files at this link:

https://github.com/r0bertz/ripple-client-desktop/releases

If you want to try it, please try it with testnet account, account with small balances, small transaction size, in that order. Because even though there is no known bug to me, after all this is a one man job. There could be bugs that I haven't seen yet.

To change server to testnet server, check "Online mode" under Network settings. Testnet server address can be found here https://xrpl.org/xrp-testnet-faucet.html. After changing server, please restart the client because server reconnection is not handled very well in ripple-lib.

Note that it may take a short while for it to connect for the very first time.

Here's my tip bot account if anyone feel like chipping in https://www.xrptipbot.com/u:r0bertz/n:twitter

Thanks!

How to file crypto tax for free

2019-04-21T10:18:00.002-07:00

I just published the scripts that I used to prepare tax for XRP sales. With no or minimal changes, it should work for any crypto, any exchange.

The repo is at https://github.com/r0bertz/node-xrp-tax

Below is the contents of README.md:

XRP Tax

This is a collection of scripts to prepare tax for crpyto (not necessarily XRP) sales. A majority of this project deals with XRP Ledger, so it is called "XRP Tax". The end product is a csv file that can be uploaded to http://www.easytxf.com.

Things to note

Terminology:
- Symbol: The currency being traded.
- Currency: The currency you paid/got when buying/selling Symbol.
USDT is considered USD.
The csv format (except that of the end product) is bitcoin.tax format¹.
The Source column is overloaded. If Action is SEND, Source is actually destination.
Only LIFO (Last-In, First-Out) method is implemented.
LIFO method is universally applied for a Symbol no matter where the trade actually happened.
Like-kind exchange is not supported. If Currency is not USD, it will be converted into USD price.

Install dependencies

npm install -g bignumber.js csv dateformat fs lodash node-fetch ripple-lib yargs

Example

Suppose one guy has traded XRP on XRP Ledger, bitstamp and poloniex. He has transferred XRP back and forth between these exchanges. He wants to get a TXF file for the XRP trades he did in 2018 so that he can import it into TurboTax.

He has an addresses.json file which looks like:

{
  "rvYAfWj5gh67oV6fW32ZzP3Aw4Eubs59B": "~Bitstamp",
  "rpdADzXQJrnHKDJV9p7A4UwHsjT3rhm2cx": "~RippleTradeXRPBonus",
}

A hint.json file which looks like:

{
  "~RippleTradeXRPBonus": "Gift",
}

Bitstamp transaction history file:

bitstamp/Transactions.csv

Poloniex history files:

poloniex/depositHistory.csv
poloniex/tradeHistory.csv
poloniex/withdrawalHistory.csv

The following commands will generate a file that can uploaded to easytxf.com.

node XRPL/getTransactions.js --account $ACCOUNT --output transactions.json
node XRPL/exportTrades.js --account $ACCOUNT --input transactions.json --addresses addresses.json --cost_basis_hint hint.json  > xrpl.csv
# Find out the timestamp for all trades if it is a Gift or if Currency is not USD.
node XRPL/extractPricePoint.js --input xrpl.csv > usd.json
# Fill usd.json with XRP price in USD. Some requests may fail due to rate-limiting. Retry as needed.
node fillPricePoint.js --input usd.json
# Replace price with price in USD if Currency is not USD.
node XRPL/replacePrice.js --input xrpl.csv --price_file usd.json > xrpl_usd.csv
node bitstamp.js --symbol XRP --input bitstamp/Transactions.csv > bitstamp.csv
node poloniex.js --type deposit --input poloniex/depositHistory.csv  > poloniex.csv
node poloniex.js --type trade --input poloniex/tradeHistory.csv  >> poloniex.csv
node poloniex.js --type withdraw --input poloniex/withdrawalHistory.csv  >> poloniex.csv
cat bitstamp.csv poloniex.csv xrpl_usd.csv > unsorted.csv
sort -t, -k1,1 -k3,3r -k5,5 unsorted.csv > sorted.csv
# Merge a SEND with the immediate next RECEIVE if RECEIVE is equal to or slightly less than SEND.
node mergeSendReceive.js --input sorted.csv > xrp.csv
node profit.js --input xrp.csv --year 2018 --combine --easytxf > easytxf.csv

Upload the last file to easytxf.com to get a txf file XRP.txf. easytxf.com assumes the cost basis is either short-term covered or long-term covered. It needs to be changed with:

# Change short-term covered (321) to short-term not reported (712)
# Change long-term covered (323) to long-term not reported (714)
sed -i -e 's/N321/N712/' -e 's/N323/N714/' XRP.txf

1 The format doesn't really matter. I used to use bitcoin.tax, not anymore. ↩

Announcing https://orderbook.xrp.ninja

2019-03-10T11:28:00.001-07:00

I just made a website https://orderbook.xrp.ninja. I have explained why I did it in the front page.
I am going to record some of the problems that I had and how I solved them in this post.

Prod code doesn't work

The code works in development mode. But it doesn't after minified. The error message was:

Uncaught Error: [$injector:modulerr] Failed to instantiate module rp due to: Error: [$injector:unpr] Unknown provider: e

I found a post on stackoverflow and fixed it like this.

Add domain to an existing Letsencrypt cert

$ certbot certonly --cert-name rippled.xrp.ninja -d rippled.xrp.ninja,ripple.xrp.ninja,www.xrp.ninja,xrp.ninja,orderbook.xrp.ninja

Redirect http traffic to https on lighttpd

Add this to lighttpd.con and also enable mod_redirect.

$HTTP["scheme"] == "http" {
    # capture vhost name with regex conditiona -> %0 in redirect pattern
    # must be the most inner block to the redirect rule
    $HTTP["host"] =~ ".*" {
        url.redirect = (".*" => "https://%0$0")
    }
}

Add response headers

Use http://redmine.lighttpd.net/projects/lighttpd/wiki/Docs_ModSetenv. Also there is a useful site to scan the header settings of a website: https://securityheaders.com/

Https link in iframe downgraded to http

The chart on the orderbook page is an https link to xrpchats.ripple.com. However, inexplicably the https link was downgraded to http and it can't be displayed since mixing https and http contents is not allowed.

I tried setting upgrade-insecure-requests in Content-Security-Policy. Then the problem was gone. But later it reappeared. I finally realized this is because ripple changed the link format. See this commit for details.

Javascript file size too large

The vendor.js file is too large. I have removed lots of unnecessary code. But after minimization, it's still 1.04 MB. I got the following picture with webpack-bundle-analyzer. The picture shows gzipped size. The gzipped size (320 KB) is acceptable.

To enable compression in lighttpd, mod_compress must be enabled, compress.cache-dir must be setup with proper permission and compress.filetype set to something like this:

compress.filetype          = ("text/plain", "text/html", "text/css", "text/javascript", "application/x-javascript", "application/javascript", "application/font-woff")

Note that I only had "text/javascript" in this list which didn't work. Later I added the other two javascript types and it worked. I don't know how the type is determined though.

I plan to shrink it further with the help of inspectpack-plugin.

Orderbook doesn't update

See this commit for details.

Use `font-display: fallback`

See this commit.

Set “Cache Control"

First append hash to js and css file names. See this commit. This feature was originally there. But it renames index.html as well. To get things work ASAP, I removed this feature without investigating what this does and why it renames index.html until now.

Then I added the following code to lighttpd.conf:

$HTTP["url"] =~ "(^/$|\.html$)" {
  setenv.add-response-header = ( "Cache-Control" =>; "no-cache, public, must-revalidate" )
}

$HTTP["url"] =~ "^/(js|css|img|fonts)/" {
  setenv.add-response-header = ( "Cache-Control" =>; "max-age=31536000, public, must-revalidate" )
}

Gulp bash completion

2019-03-09T16:25:00.001-08:00

https://www.npmjs.com/package/gulp-bash-completion

I tried this. I followed the instructions on the above page, but it didn't work.

Then I did the following and it worked:

Locate the gulp-completion.bash file installed by the package.
Change the echo_gulp_tasks variable in gulp-completion.bash file to gulp --tasks-simple
Copy gulp-completion.bash to /etc/bash_completion.d and source the file in current shell.

Now try type gulp [space] and hit [enter], the completion should work.

At this time, this npm package is no longer required. So you can uninstall it.

Revive ripple-client-desktop

2019-01-04T12:22:00.000-08:00

Update: as of Jan 15, 2019, trading is working.

https://github.com/r0bertz/ripple-client-desktop

The first goal is to make it fully functional with RippleAPI.

Current status is most read only operations are working except order book.

Please follow this twitter thread for the most recent updates:

This weekend I tried to revive ripple-client-desktop. l I have reached a point at which I can run gulp without any warning on the command line. However, the app stuck at loading. Then I figured out that the client uses an ancient ripple-lib API.
— r0bertz (@r0bertz) December 17, 2018

Custom monitoring graphs for xrp.ninja validator

2018-11-13T23:15:00.000-08:00

As you may know, my rippled validator runs on GCE. So I use stackdriver to monitor it. I created two custom metrics for it.

One metric is uptime with rippled version as a label. Here's a live graph for this metric. From this graph, you can easily tell what the current version is and when it was upgraded to that version. You can also correlate this with other graphs to see if new version may have caused certain changes in rippled behavior.
The other metric is the percentage of current uptime that rippled has been in a certain state. Normally the curve for "full" state should asymptotically approach 100. If it is not, then rippled is in trouble.

xrp.ninja is now web-monetized

2018-11-12T13:28:00.000-08:00

I know I am have been too lazy. It's just a matter of copy and paste.

So thanks to any future coil subscriber who visits this blog. Your support will be greatly appreciated.

PS: here is a howto https://xrpcommunity.blog/how-to-monetize-your-content-with-coil/

A rippled API library in Go language

2018-04-21T23:48:00.000-07:00

https://github.com/r0bertz/ripple

I have been working on this lately. It's a fork of its original one. I learned a lot since I started working on it.

Specifically, I learned there are a lot of inconsistencies in the output of rippled API.

See for yourself in https://github.com/rubblelabs/ripple/issues/36#issuecomment-383355198

xrp.ninja Ripple validator returns normal since two day ago

2018-01-18T09:34:00.001-08:00

There's been some problems with the validator ever since it crashed about a week ago. It doesn't crash any more since I added much more disk space. But it easily falls behind and needs to play catch up several hours after each restart. I learned this from state_accounting field in the output of "rippled server_info". I created a metric and a chart from it. This is what the chart looks for the last week.

The "Full" mode state means it is fully synced and participating in consensus process. You can see it is now asymptotically approaching 100 now. The value means the percentage of uptime the validator stays in each mode.

I figured out why the disk was out of space. It was because the validator fell behind. When that happens, online delete is disabled. See this code:

https://github.com/ripple/rippled/blob/fc0d64f5eec4386db7146251ab1a7fe880bec17c/src/ripple/app/misc/SHAMapStoreImp.cpp#L751

I saw some "Not deleting" messages in the log which led me to the above code.

I still can't determine the exact reason why it fell behind. I suspect it was caused by some "insane" testnet peer. So I blocked some peers with iptables. But now it's almost 100% full and it still has an insane testnet peer.

However I do know why it didn't recover after disk is enlarged. I believe it's because I changed the db to NuDB from RocksDB and still have online_delete set in the config. I changed it because I learned NuDB works better on SSD. But it doesn't support update or delete. It is meant to be used in full history validator. It appears that when it tries to do online_delete, it starts to fall behind. Now I have switched back to RocksDB and everything is fine.

xrp.ninja Ripple validator crashed last night due to low free disk space

2018-01-10T13:17:00.002-08:00

The above graph shows what happened.

I did get an alert from GCE that disk usage was high. I have an alert policy which says alert me if disk usage is over 80% for more than 5 minutes. However, it was too late, so I didn't get up and thought maybe it could resolve on its own. But it didn't. And GCE didn't keep alerting me, which surprises me.

Rippled logged these two lines before it died:

2018-Jan-10 11:33:27 Application:FTL Remaining free disk space is less than 512MB
2018-Jan-10 11:33:27 Application:FTL Application::onStop took 23ms

So rippled killed itself:

https://github.com/ripple/rippled/search?utf8=%E2%9C%93&q=%22Remaining+free+disk+space+is+less+than+%22&type=

Before that, log was flooded with the following messages for 5 hours:

2018-Jan-10 10:55:08 LoadMonitor:WRN Job: recvGetLedger run: 1390ms wait: 0ms
2018-Jan-10 10:55:32 LoadMonitor:WRN Job: recvGetLedger run: 1250ms wait: 0ms
2018-Jan-10 10:55:32 LoadMonitor:WRN Job: recvGetLedger run: 1533ms wait: 0ms
2018-Jan-10 10:55:32 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1534ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 712ms wait: 1230ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1937ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1927ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1927ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1927ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 2ms wait: 1922ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1924ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1922ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1918ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1913ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1909ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1897ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1897ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1890ms
2018-Jan-10 10:55:33 LoadMonitor:WRN Job: recvGetLedger run: 0ms wait: 1890ms

So it kept getting new ledgers and wrote to the db, till it filled the partition and killed itself.

I have no idea why it got so many new ledgers, as of now.

I fixed it by resizing the disk, partition and filesystem.

I have also changed the db format from RocksDB to NuDB which I should've done when I first started running it.

Ripple's Decentralization Strategy

2018-01-09T14:54:00.001-08:00

Copied from the following link:

https://www.xrpchat.com/topic/16362-rippled-0810-released/?do=findComment&comment=191441

mDuo13 wrote this. Kudos to him.

To recap the Decentralization Strategy, here's a summary:

Switch to using a validator list site (vl.ripple.com). This is where we are now.
- All rippled instances configured to use the site can automatically follow Ripple's updates to the recommended set of validators, in lockstep.
- In case you're curious, the validator list site publishes cryptographically signed recommendations of validators, so it's not easy to impersonate. And rippled caches the data it gets from the site, so the XRP Ledger won't go down even if vl.ripple.com is down for a while. (It might be tough to bring new rippled servers online while vl.ripple.com is down, but I think there are some protections against that, too.)
Update the site and the existing validators to use validator tokens instead of master validator secret keys.
- This adds security to the existing validators. By using tokens, that Ripple can keep the master validator keys offline and periodically rotate the tokens, for example if an operations engineer who might've had access to the config files leaves the company.
Update the site to add 16 new Ripple-controlled validators to the existing 5.
- The main reason for this is so that any new individual validator isn't too large a slice of the pie.
Add new third-party validators. For every two third-party validators, Ripple will remove a Ripple-controlled validator from the recommended list.
- This will probably occur gradually over the course of 2018 and beyond.
Eventually, as the size of the network has grown, Ripple will encourage others to run validator list sites similar to vl.ripple.com. As long as the lists published on the different sites have sufficient overlap, servers using any list won't fork away from each other.
The "Secret Future Stuff" I alluded to, which may also occur before or as part of step 5.

xrp.ninja Ripple validator upgraded to 0.81.0

2018-01-08T21:45:00.003-08:00

Information about this version can be found here https://ripple.com/dev-blog/rippled-version-0-81-0/.

This happened at about 1:45pm local time.

There were some behavior changes after the upgrade:

Monitoring ripple validator running in GCE

2018-01-01T23:33:00.003-08:00

GCE provides various kinds of metrics from which one can create dashboard, alerting policies etc. However, there is no way to monitor performance of rippled unless we wrote something ourselves.

Fortunately, GCE allows creating custom metrics. So as a starting point, I decided to create a metric for rippled build_version. This information is very useful. For example, you will be able to tell if the behavior of the server changes after version changes.

However, I later learned that custom metric can't have "STRING" as its value type. So I created an uptime metric with build version as its label. It works just the same.

Here is a screenshot of the chart created from this metric:

Unfortunately, it seems I can't share this chart publicly, unlike charts created from built-in metrics which can be shared publicly.

What a deflationary currency will bring to the world?

2017-12-20T17:02:00.000-08:00

I have been wondering about this lately. Then I found this article:

http://eliasbizannes.com/blog/2017/10/why-bitcoin-or-another-deflationary-currency-will-lead-to-an-economic-revolution/

TL;DR: as long as investment has higher return then hoarding the deflationary currency, people will invest instead of hoarding.

Similarly, if market maker can make more than hoarding XRP, market maker will make market instead of hoarding.

How exactly is XRP going to work as a bridging digital asset?

2017-10-21T19:43:00.004-07:00

Maybe this is obvious all along to some people. Anyway, I just figured this out. So I thought maybe it's worth sharing.

Previously I thought the bridging consists of two transactions, both on XRP ledger. One from fiat currency A IOU to XRP, the other from XRP to fiat currency B IOU.

Then I saw this:

https://www.xrpchat.com/topic/10981-xrapid-uses-crypto-exchanges-to-route-payments-in-real-time/

So Miguel Vias said in the pilot they used liquidity on bitstamp and bitso. However it's seems the trading volume of XRP/bitso.MXN since the beginning of 2017 is so low that it's virtually no liquidity there. See this:

https://xrpcharts.ripple.com/#/markets/XRP/MXN:rG6FZ31hDHN1K5Dkbma3PSB5uVCuVVRzfn?interval=1d&range=1y&type=candlestick

Then I realized, just like bitstamp, bitso has its own exchange and the liquidity there is much better.

https://bitso.com/trade/market/xrp/mxn

So now it's clear to me there is another way for XRP to bridge cross-border payments. The originating party acquires XRP however it wants, buy XRP on XRP ledger using source fiat currency IOU or buy XRP on an exchange then withdraw to its ripple wallet on XRP ledger. Then it deposit the XRP to an exchange. This happens on XRP ledger. Then buy the destination fiat currency using XRP on that exchange. All of these can happen very quickly since transactions on exchanges are also fast.

Does this make sense? Let me know your thoughts. Thanks!

More ILP news

2017-10-20T12:56:00.001-07:00

An article about ILP posted on American Express's website. It could mean nothing. But I won't be surprised if AE turned out to be using ILP for real since there's already rumor about it.

https://www.americanexpress.com/us/content/foreign-exchange/articles/international-payments-hyperledger-interledger/

everis (NTT Data) confirm their adoption of ILP as the Hyperledger Quilt Project

http://insights.everis.co.uk/post/102eihg/everis-ntt-data-confirm-their-adoption-of-ilp-as-the-hyperledger-quilt-project

These news prove that Ripple's collaboration with Hyperledger to produce the Java implementation of ILP (Hyperledger Quilt Project) is a very brilliant move.

So what does that mean for XRP? If you are a long time XRP hodler, you probably have already known this. But if you don't: The more ledgers ILP connects, the more payment volume XRP will be able to bridge. See also this.

Ripple released Q3 XRP market report

2017-10-19T12:23:00.002-07:00

https://ripple.com/insights/q3-2017-xrp-markets-report/

The release caused the price to shot up vertically. Although it fell back a little shortly after.

The highlights of the report in my opinion are:

23 percent Q-o-Q volume increase
More xRapid partnerships to be announced in Q4

xrp.ninja ripple.txt

2017-09-11T13:15:00.002-07:00

I have created ripple.txt for my validator, following this instruction:

https://wiki.ripple.com/Ripple.txt.

Here is the link to my ripple.txt

https://xrp.ninja/ripple.txt

Here is my validator:

https://xrpcharts.ripple.com/#/validators/nHBTqw7vwjqrSMruoQNYmSXcrBmQHDquG7jgvrsQpurGaVELqdNx

I am going to have ripple employee change the validated domain name from rippled.xrp.ninja to just xrp.ninja.

The ripple.txt file can be validated here: https://ripple.com/build/ripple-txt-validator/

Several possible attacking modes on XRP ledger

2017-07-13T16:12:00.001-07:00

https://www.xrpchat.com/topic/7229-a-question-about-validators/?do=findComment&comment=69555

There are several degrees of damage, that trusted validators can do (if they decide to give up their hard-earned trust), in increasing difficulty order:

If a set of them, each of which only trust others in the same set, with less than 20% of them trust validators not in that set, decide to collude, they can create fork.
If more than 20% of them decide to collude, they can prevent transactions from being validated.
If more than 80% of them decide to collude, they can rewrite history as they wish.

However, as pointed out by mDuo13@, creating a fork is easy, but making people accept it is hard.

Ripple's XRP: Giving the Third-Largest Cryptocurrency a Second Look

2017-07-10T00:10:00.002-07:00

http://www.coindesk.com/ripples-xrp-giving-third-largest-cryptocurrency-second-look/

It's not news that coindesk is very biased against Ripple. But publishing such an article is crossing the line. This author either really didn't know Ripple well, or he just wanted to mislead people. It's a shame for coindesk to publish such a garbage.

I will refute some of the claims made in that article.

"Instead of using proof-of-work, it relied on a new, unproven consensus protocol."

Calling ripple consensus protocol is unproven is a bold assertion. Yet it didn't even try to back it up. On the other hand, XRP ledger has been in use for years and there has been no reports that it doesn't work. And it has defended itself against Stellar's attack once.

"This protocol requires users to extend trust to validating servers that produce this consensus."

False. Users only need to trust gateway. Users never need to trust validator. Validators need to trust validators. Each validator keeps its trusted peers in UNL. The consensus is achieved if 80% of the validators agree on a set of transactions. The UNL for each validator can be different.

"Relying on trust, rather than proof-of-work, kind of makes sense for Ripple, because you need similar trust relationships anyway for IOUs to work."

It doesn't make sense to compare trust with proof-of-work. Because consensus in Ripple is not achieved through trust. I just discussed how consensus is achieve in the previous point. Whether or not a single trusted validator validates a transaction doesn't mean anything.

"Instead of needing to trust only the mathematics of proof-of-work, you can only trust the XRP token by setting up trust lines that almost inevitably end at Ripple."

This is completely nonsense. XRP doesn't need trust. XRP is the native asset on XRP ledger. It doesn't need trust lines. And, trust (whatever he means by it) doesn't bear any resemblance to proof-of-work.

"And while in theory anyone can set up such a server, if Ripple does not include your server in their trust lines, then you're not part of the consensus-making process."

This is nonsense too. There is no such thing as including a server in trust line. However, a validator does need to be trusted by other validators to participate in the consensus process. But Ripple, the company, doesn't decide whether a validator is trusted or not. Each validator choose their own trusted validators. Ripple, the company, currently does recommend a list of trusted validators. But that doesn't mean everyone must use it.

"So, Ripple is highly centralized and XRP is more akin to a PayPal account than a trustless system like bitcoin."

The argument that Ripple is centralized only makes sense at this moment if you are referring to the fact that most validators currently trust the UNL that Ripple the company recommends. However, that will change. See this. It should be noted that it's actually much easier (you read it right, easier) to gain super power in bitcoin network than in ripple network, because in bitcoin network, all you need is the sheer computing power, but in ripple network, you need to make people trust you. It's much harder to gain people's trust.

Also XRP is not like PayPal at all. Anyone can create a ripple wallet. And there are many ways to activate it. No one can control it but the owner of the wallet. On the other hand, a PayPal account can be terminated by PayPal at any time.

"why would liquidity providers not use any other common (reserve) currency like US dollars for that, especially considering the highly volatile price of XRP ?"

Market maker would use XRP instead of USD for bridging asset for the following reasons:

USD is inflationary, XRP is deflationary
XRP has some features which make it a better bridging currency on ILP:

Autobridging https://ripple.com/dev-blog/introducing-offer-autobridging/
Escrow https://ripple.com/build/amendments/#escrow

The high volatility is not an issue. This is already taken into consideration. See the following graph, using high volatility XRP, Ripple's customers (banks) just need to pay more for currency hedging, but still it's cheaper than not using XRP. If XRP market becomes stable, the customer will save even more money.

"In short, it's hard to come up with any rational reason why XRP exists in the Ripple protocol, other than as a means for Ripple to make money."

It's just clueless for him to say XRP is just a means for Ripple to make money. Ripple, the company, doesn't make money by selling XRP, at least it won't be their long term revenue source. Their employees doesn't make money by selling XRP. They are not allowed to sell XRP while being employed.

"That's like ignoring the estimated 1 million bitcoin in [bitcoin creator] Satoshi Nakamoto's wallet just because they are not circulating at the moment, and may never circulate. "

That's totally different. XRP supports escrow. Bitcoin doesn't. If some XRP is put into escrow, it's just impossible for them to go into circulation. Just no way. There is no such guarantee for Satoshi's bitcoin.

"ILP was also developed by Ripple, and appears to be a fairly impressive piece of technology to bridge between various blockchains and systems. It's open source, hosted by the Linux Foundation and could become a part of the Hyperledger framework."

ILP is not hosted by Linux Foundation. Hyperledger is hosted by Linux Foundation. The only connection between ILP and Linux Foundation is Hyperledger Quilt which is a Java implementation of ILP.

"But note that ILP itself has no native token; it doesn't depend on XRP and doesn't add value to it. Even if ILP finds wide adoption in the fintech industry, it will do precious little for XRP."

ILP provides a level playground for bridging assets in which XRP by far seems to be the single player. Using bridging asset will have great benefits for banks because banks doesn't need to keep cash in nostro accounts any more.

"As for the moonshot of replacing Swift; first of all, I highly doubt a global consensus protocol is the right approach and could even scale to that level. But also, banks currently control Swift. How likely is it they would relinquish control to a small startup and allow themselves to become beholden to its private currency, that they have no need for? I just don't see that happening."

It's not XRP ledger that will replace Swift. It's ILP which is not a global consensus protocol. Swift is testing Hyperledger Fabric which will allow Swift to have real-time settlement ability, just like ILP. However, Ripple's solution will still have advantage over Swift's Hyperledger Fabric solution. See https://ripple.com/insights/empire-strikes-back/ The empire will be defeated. And the lethal weapon will just be XRP.

This article effectively pointed out ripple will be one of the final winners and yet it didn't know it

2017-06-30T13:21:00.000-07:00

http://www.zerohedge.com/news/2017-06-30/understanding-cryptocurrency-boom-and-its-volatility

It says:

speculative booms eventually end and technologies mature into forms that solve real business problems in uniquely cheap and robust ways no other technology can match.

That said technology exists today. It is Ripple/XRP.