The court has unsealed the two legal memos by Perkins Coie LLP in their entirety, as requested by Ripple and Chris Larsen. ̃
The documents were both sent to Ripple in 2012, with one regarding NewCoin (February 18, 2012) and the other about Ripple Network/OpenCoin (October 19, 2012).
The unsealing follows a letter filed by Chris Larsen and Ripple proposing the documents to be released to the general public.
“Mr. Larsen believes that, if any part of the Legal Memos is unsealed, then both documents should be unsealed in their entirety so that the public can review the SEC’s characterizations of those documents in their full context.”
That letter also included Exhibit E, which mentions one piece of advice offered by law firm Perkins Coie LLP: that investors and employees should not receive XRP as it could risk SEC designation of a security.
The evidence suggests that Ripple executives made efforts to keep XRP from being considered a security by the Securities and Exchange Commission.
The legal memos sent by law firm Perkins Coie LLP show how its analysis helped Ripple to design the digital asset in order to avoid being regarded as an investment contract.
Initial conclusions include that:
- Coins that are purchased are likely to be prepaid access;
- If sold to investors, Coins are likely to be securities;
- Coins not initially sold may still constitute securities if sold at a later date;
- Coins may become commodities;
- Exchanges may be money transmitters or currency exchangers;
- Coins are unlikely to be regulated under counterfeiting laws;
- Founders and Foundation may be subject to illegal gambling regulations;
- Accuracy in promotion of NewCoin will be necessary to avoid unfair and deceptive trade practices;
- Founders and Foundation may face risk related to aiding and abetting illegal activities perpetrated using Coins;
- Users of Coins will have obligations to comply with state and federal tax laws relating to transactions involving Coins.
As to Recommendations, Perkins Coie LLP said:
- Do not sell Coins;
- Accept investment investment through an entity;
- Do not collect fees;
- Take steps to avoid misleading purchasers or recipients of Coins as to their value or the risks associated with them;
- Avoid stating or implying that the Coins are equivalent to or compete with USD or any other type of government issued currency;
- Do not advertise the Coins for use in illegal internet gambling;
- Do not promote the Coins for illegal or questionable uses, and educate the public and users that NewCoin does not oversee or otherwise control the use of the Coins;
- Do not use Coins in lieu of payment to employees;
- Founders should consider publishing NewCoin usage conditions.
