Ripple, the fourth biggest cryptocurrency with a market cap of $22 billion, has risen a bit more than bitcoin or eth in the past week, gaining 20% while eth has risen just 10% and bitcoin 15%.

Pretty much all of its gains were on Monday when the currency started moving while bitcoin stayed stable. Eth joined, leading to speculation the move had something to do with the securities debate.

That debate is now being held in courts up and down the country, and specifically one court that the Securities and Exchanges Commission (SEC) seems to like, the Southern District of New York.

Judge Analisa Torres has been hearing for two years in that court Ripple, the company, argue against SEC which claims XRP is a security.

Their claim was based on the fact that Ripple holds about half of XRP’s total supply, and there are also questions regarding just how decentralized ripple the protocol is as it doesn’t quite use a blockchain, but some gossip protocol based on the existing node quorum choosing to add or not add new nodes.

In the tribal fights within the crypto space, xrp is usually dismissed due to the latter reasons, but the case is in many ways Crypto vs SEC, not SEC vs XRP.

That’s because xrp came to the public through what back then wasn’t quite called an airdrop. They gave it away for free in the amount of 50,000 XRP in 2013 to anyone in the bitcointalk forum who posted in that thread and said they wanted the xrp.

From those humble begins and a price of zero, they often, though very briefly and usually at the end of hyper-bull runs, even surpassed bitcoin in market cap or eth when the latter permanently kicked XRP off second position.

It has survived for decades while maintaining its position through numerous bulls and bears, in contrast to many many cryptos that have dwindled through the rankings.

And that suggest it has its own community, a somewhat active one, even a semi-real XRP army during better times, with anecdotal ‘evidence’ suggesting they might reach audiences that other cryptos like bitcoin or eth don’t, initially anyway.

That community has followed the court drama in every twist, often making a big deal out of what might seem little, with routine paper disclosure decisions hailed as victories, and all sorts of theories that paint ethereum’s Joe Lubin and the then SEC Director of Corporate Finance William Hinman – who declared eth is not a security – as some sort of bad guys.

All fair game in crypto tribalism of course, but their point is simple: how can they be a security and eth not? And their answer is somewhat simple too: eth is more resourceful and was more active to get SEC off its back.

They use far more colorful language of course, and seem to have somewhat succeeded at the edges to re-raise that question of whether eth is a security, although we consider it very settled as there’s a whole background that goes with that Hinman announcement.

But while this is the public arena, in the court arena it appears their main focus was in arguing that there is no common enterprise in XRP, as required by the ancient – by our standards – Supreme Court case that established the Howey test for securities.

Instead they are arguing there is only “common interest” while denying they meet any other requirements as well, like an “investment contract.” Ripple rightly says there was no contract here.

An investment of money… well, they got it for free. A reasonable expectation of profits, well it was given away for free so not expectation, more like meh, maybe, back then anyway, to the point very many didn’t claim it even though they were very aware of it and all it would have taken was to say yes to get what at one point was worth $50,000.

There also has to be an expectation that the profits are “derived from the efforts of others.”

If we go back to that 2013, and the present writer could claim it, didn’t, in part because didn’t qualify, it’s hard to say anyone knew of these ‘others’ or even cared.

If there was any expectation of value in fact, it would have been based on the capabilities of the protocol which at the time was already running prior to the airdrop, in its design, and whether it was decentralized – the latter being a subject of a very long debate tribalism within the crypto space.

Back then in addition there was no awareness, certainly where the common airdrop claimer or even investor is concerned, that these protocols can change or there’s devs to it or that those devs are ‘useful’ at all.

As the long debate and even ‘civil war’ in regards to bitcoin’s blocksize showed, many had taken to heart a comment Satoshi Nakamoto had made where he stated the bitcoin protocol had been frozen in stone.

It’s not until ethereum came along with an organized dev team and a long plan to get to planetary scalability, that many in crypto learned the protocol can change.

The wider public learned it only when ethereum upgraded to full Proof of Stake in September last year, at least according to the Economist which at the time said this showed that these crypto protocols can change and develop.

The great myth of Satoshi Nakamoto moreover and his disappearance, all fundamentally making the point that we don’t need devs, coders or anyone as we can all run the nodes and change the code however we please, gives further credence to the suggestion there was no reasonable expectation the efforts of others either would create or in any other way would add value.

SEC of course would say but there are these devs, there is Ripple the company. Well, there is a Linux foundation as well, and there’s a community of devs looking after PHP, WordPress and many other things, and people obviously expect someone to do the code work, but that someone is the collective us, all of us.

That’s the nature of open source code, and crypto is open source code. It has its benefits, this semi-communism in a way or collectivism, but it has its drawbacks in as far as, as a user, you can’t really e-mail anyone to complain or expect anyone to be fired because they’re not delivering something you want or are delivering something of shabby quality.

Naturally we expect some sort of standard, but that’s based on community rules, processes, etc, it’s based on our own efforts.

Now that we worked so hard and we built so much on crypto and its worth a lot, there’s also obviously plenty of profit motive, there are plenty of businesses that rely on the code and yadayada, but the open source nature, the nature of permissionless participation, and that collective nature in a way in as far as we share our code and we fork our dapps or our blockchains, remains fundamental to crypto.

We also have our debates of course, fierce debates, regarding just how much any of those aspects are met and to what degree and by which, but often these are more… not necessarily matters of fashion choice, just measuring of degrees.

If it is SEC doing that measuring and not us, then by definition that crypto can not meet those qualities because whoever is signing those SEC papers is in charge and if they are not in charge, then they can’t sign the papers. If they are in charge, then obviously the crypto is not decentralized or permissionless.

The impossibility of meeting SEC requirements has in fact been cited as the reason many companies that are very regulatory-abiding are fighting the SEC.

The very fact that SEC is trying to apply to crypto regulations that are called “investment contracts” shows as much because there is obviously no contract in open source code.

One can make the other side of the argument, as SEC does, that all this talk about open source and decentralization is a mirage and is not real, but just because it is an official making a conspiracy theory, doesn’t make it any less such.

There is a fundamental difference in crypto, in nature, form and substance, derived primarily from the nature of code itself and other aspects that have come with the internet.

The SEC chair Gary Gensler is not a coder, and SEC itself as an institution did not try until 2019, long after they had declared things like the DAO as a security, to run crypto nodes so that they can see what the front interface of crypto is.

Behind that interface, the node ‘app,’ there’s a whole city of code and pipelines and high speed rail and horse carriages, nowadays of bots moving on pods running on nfs-ed kubernetes nodes.

But Gensler is not a coder, so none of this is real, this city he can’t see, because he has never felt just what ordering code is and just how much control you have over these living books.

That’s what these protocols are, books… lines and lines of written code, but they live in as far as they do things unlike books which are static in form and live in as far as touch your imagination.

And because Gensler is not a coder, he ignores that entire aspect, and of course without the code then yes these would be securities but that’s like saying without the wheels your bicycle would be your aunty, or if your aunty had wheels she’d be a bicycle.

Judge Torres however is not a coder either. She has had in court representation from coders at Ripple, but the first question is just how well the fundamentally distinct code based nature of crypto has been explained to her, which was on Ripple’s lawyers.

She does not have a background in finance either. Her work in the law firm years was instead in real estate, that’s buying houses or selling houses, managing covenants and all that Land law which in many ways has nothing to do with finance, or the chancellary.

She is a district judge however, that’s the very first instance court, and that’s the nature in those courts. A bit like in primary school one teacher teaches all subjects, and then you get distinct teachers for each subject.

The main concern instead is that she’s a democrat, appointed by Barack Obama in 2013.

In this space we’ve tried to be neutral of course and this paper backed Biden in 2020, but democrats have tended to be a bit more biased against crypto than other outlooks.

That gives us a nice way out if she decides against Ripple, which to avoid disappointment is what we should expect.

It would however, especially looked from across the Atlantic, raise significant questions about this party appointment of judges and just how independent that really make the US judiciary, but that’s another matter if it came to it.

Ripple has said they will appeal if they lose, in which case for the first time crypto would go to a ‘real’ court as far as these hefty analysis of reasonableness are concerned, but first they’d have to go to a… semi-real would be too harsh a word, but you get the point as there’s the Circuit court and then the Supreme Court, unless they decide to stop at the Court of Appeal as well.

The latter two are where the real decisions and analysis are made in complex, new, unique and novel issues, as of course this crypto question is.

For other matters all these courts are real, obviously, but if Ripple loses at this district court in New York then we’ll put it down to some decision by some judge which doesn’t even bind other judges sitting in the same court, let alone the crypto space or the public.

Of course if crypto wins, then SEC is out, it would prove all things, not securities, case closed, and free once more.

There, is the potential for hype. If they lose, nothing lost. There’s a whole drama of many episodes to follow instead, full of paper twists and minutes turned into a grand show and tales of victories, abuse, biased, truths.

That’s what you have to love about crypto, the passion. But if they win, Freeeddooom. Come you all enslaved to the land of liberty.

Making this case somewhat unique as we’ll easily dismiss it if it goes against, but we’ll hail it as the ten commandments of Mosses himself that kicked SEC out if it goes in favor.

And if it doesn’t, then we’d have a real court case to look forward to where the decision does matter and we’d have to scrutinize every word in that decision in the Supreme Court.

That would be years away however, with the timeline of when Torres will make a decision being unknown too. Maybe in weeks, months, tomorrow.

But the arguments have ended. Now she is the only show, and in that time of waiting, there’s is plenty of potential for rippletonians to say or hype all sorts of things, even if there is the slightest of chance and this is more maybe 50/50.

SEC, coward SEC, won’t appeal the decision however if it goes against them. They don’t want a real judgment, a binding decision. They’d rather bypass the oversight of the judiciary and keep on their conspiracy that code isn’t real, that all this is just paper contracts like 100 years ago.

That said, the judge has a difficult decision and SEC is not entirely without point, they’re just fundamentally mistaken in not adapting at all, in attempting to force compliance with what is impossible to comply, rather than come up with reasonable regulations where there are fiduciary relations.

The latter is not quite their job, it is that of Congress. Nor however is it their job to come up with new law by stretching to absurdity the definition of paper contracts.

Instead until Congress decides and if it does decide to come up with anything, the CFTC can oversee this space. They have jurisdiction over fraud and the like. We are very supportive of our boys in the criminal law, so there’s the deterrence of prison as well as Sam Bankman-Fried of FTX is finding out. What’s wrong with that set up as regulation until the law makers decide?

It is in fact how the rule of law works. The executive, SEC, can’t make law, and that they have decided to not appeal if they lose – though rumored, nothing official just semi-leaks – proves they are attempting to make law in breach not just of the constitution but all books in Law School.

When experienced and respected highly trained lawyers say it is impossible to comply, SEC has to listen. And if they don’t listen then we won’t listen either. Case closed, over to you Torres.