Forget the SEC, the CFTC and the IRS ... the biggest threat to crypto comes from class action lawsuits like the one stupidly brought by Ryan Coffey against Ripple "on behalf of all investors who purchased Ripple tokens (XRP)."
According to this CoinDesk article https://www.coindesk.com/investor-sues-ripple-and-alleges-xrp-is-a-security/ Ryan, "... filed the suit in the San Francisco County Superior Court on Thursday. Coffey is seeking damages "on behalf of all investors who purchased Ripple tokens ("XRP") issued and sold by Defendants," naming Ripple, XRP II (the company's registered and licensed MSB), CEO Brad Garlinghouse, and 10 unnamed parties."
The article continues ... "If an instrument involves an investment of money and carries a reasonable expectation of profits - an expectation that depends on the actions of a specifically identifiable group of people - then it is a security."
The actual lawsuit states (paraphrasing) there is no actual use for XRP. Ripple Labs sold XRP and attempted to manipulate the price higher by limiting supply and making public statements about its value. Coffey bought 600 XRP on January 6, 2018, for $2.60 ea, and sold it at $1.70 twelve days later, for a loss of $530 plus exchange fees.
The idea behind the lawsuit is that because XRP sold unregistered securities, everyone who lost money should be entitled to damages equal to their losses.
So here are some thoughts that come to mind ... first off, if the price had gone up instead of down, would Ryan still be filing this suit? I highly doubt it. This loser, who decided to sell for a loss, lost a paltry $530 and is so upset about it, he's filing a class action lawsuit. Really??? This is what's wrong with America, people constantly blaming someone else for their actions!
Another thought ... yes, Ripple Labs is developing blockchain technology that banks can use to transmit value across country boundaries, faster and more efficiently than SWIFT, and this technology is separate from the XRP token ... but consider that the existing banking system is teetering on the edge of the abyss! Deutchbank has $50 Trillion worth of derivitives on it's books. When it becomes insolvent, and it will, this derivative time bomb will go off, triggering a domino effect that will cascade through the entire banking system. We're talking a financial system extinction level event.
What crypto could potentially be used to restore the system? Bitcoin? Nope. Litecoin? Unlikely. EOS? Maybe (1 million transactions per second and no fees could do the trick). XRP? Maybe! And here's why ... 1) They already have established relationships with banks who have been using the Ripple Labs technology. 2) There are 800 Billion XRP available. 3) XRP transactions are super fast. 4) XRP transaction fees are super cheap.
The effect of this stupid class action lawsuit could be to not only hinder the development of XRP, but to hinder the development of just about every cryptocurrency invented beyond Bitcoin and Litecoin. Why? Because any token runs the risk of being considered a security, and be subject to the same sort of class action lawsuit, which could hamstring their development, too. At least EOS had the sense to operate outside the jurisdiction of the United States and China by preventing people from those countries from participating in their ICO.
This could have the effect of also destroying existing exchanges, because if XRP is deemed a security, along with ETH and many others ... any exchange that has allowed them to be sold would be operating an illegal exchange according to the CFTC. If they are shut down, our ability to exchange cryptos and transfer fiat back to our banks could be extremely limited. Poloniex, purchased by Circle, which is backed by Goldman-Sachs, has begun working with the SEC to bring Poloniex into compliance to be able to legally offer securities. This might be the only exchange left standing!
People need to accept responsibility and the consequences, good or bad, for their decisions. XRP isn't the only crypto to have lost value since January ... they all have, even Bitcoin! Just because there is someone to sue doesn't mean a suit should be brought. The biggest reason Satoshi was a genius might not be because he created the bitcoin code, but because he remained anonymous!