Renowned Blockchain lawyer John Deaton has explained the shortcomings in the SEC’s claim that Ripple and XRP are securities. In a lengthy tweet on Twitter, he backed up his claim with past statements from SEC chairman Gensler.
Lawyer John Deaton explains SEC’s flaws in Ripple claim
In a series of tweets today, John Deaton revealed the weaknesses of the SEC’s claim that XRP is a security. Deaton first quoted a 2018 provision of the US corporate finance regulation. This rule contains the following statement:
Cryptocurrency itself is simply code. However, the way it is sold by entrepreneurs as part of an investment to non-users to develop the business can be a security in this context.
Deaton said that such a statement does not match the status of the Ripple token, as a coin can only be considered a security if backers sell it to non-users as part of an investment. The lawyer also argued that thousands of XRP investors bought tokens to create a TrustLine with XRP to transfer value and receive salaries through BitPay and other vendors. He added that as thousands of merchants accept payments, many are using XRP instead of fiat currencies.
Gary Gensler previously said that PoS Blockchain tokens are securities.
Specifically, the Howey test is used to determine whether a crypto qualifies as an investment contract and subjects it to federal security laws. The SEC chairman had previously argued that PoS blockchains like Ethereum (ETH), Cardano (ADA) and Solana (SOL) could pass the Howey test. Accordingly, Deaton is referencing another provision of the law that states that a cryptocurrency is unlikely to meet the Howey Test if:
It can be used immediately or replace real (or fiat) currency for payment in a wide variety of contexts.
Meanwhile, Ripple CEO Brad Garlinghouse said he is optimistic that a decision on his legal dispute with the SEC will be reached in 2023, potentially in the first half of this year. The case concerns whether XRP should be treated as a security with significant implications for both Ripple and the broader crypto market.
cryptocoin.com As we have reported, the parties submitted their final summaries in December, accusing each other of flexing the law, asking for a summary judgment on the case. Garlinghouse said he expects the decision to arrive “sometime in the next single-digit months” – potentially in June. He added that although he was open to prospects, he did not expect the company to settle the case.
How about Ripple (XRP) price?
According to CoinMarketCap, XRP maintains its position as the 6th largest cryptocurrency by market cap. It has remained stable over the last 24 hour timeframe. It is trading at $0.4231, gaining around 8% compared to last week. Despite its negative performance in recent days, it has managed to maintain its gains on a weekly scale.
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