Pro-XRP lawyer John Deaton said that his major issue has been the SEC’s treatment of Ripple for the secondary sales of XRP. He also explained how the Howey Test doesn’t hold merit in this case.
Ripple CEO Brad Garlinghouse thanked the XRP Army for supporting the company through the tough time in the legal battle with the SEC.
The crypto community has been eagerly awaiting the outcome of the long-drawn battle between the US SEC and XRP-issuer Ripple. In a recent development, pro-XRP lawyer John Deaton has engaged in a major argument with former SEC attorney Marc Fagel surrounding Ripple’s initial sales of XRP.
Fagel noted that based on his 30 years of experience in dealing with the securities markets, the SEC was right in alleging that Ripple violated Section 5 of the Securities Act via its XRP sales. He further added that the SEC has a better summary judgment and argument over Ripple. But Fagel said that it wouldn’t surprise him if Ripple manages to win the case in the end.
Pro-XRP lawyer John Deaton countered the argument by quoting a legal document, referenced “ECF 640″, stating that the purchase of XRP was an investment of money into a common enterprise. While Deaton agreed with Fagel that most of the altcoins violated Section, he said that his major problem was with the way the SEC laid out its argument. The pro-XRP lawyer said:
I wouldn’t argue against you on that point. I’ve stated that initial sales of most altcoins violated Section 5. My issue, as you know, has always been secondary sales. That’s why I became amicus in LBRY and the judge agreed with me that his order didn’t implicate secondary sales.
Addressing the Howey Test
Furthermore, Deaton also argued that the SEC should not attempt to shortcut the Howey analysis, a legal test that determines whether an asset qualifies as a security or not. He added that the SEC cannot allege that every sale of XRP, from the beginning to the end, meets all three criteria of a Howey test.
Deaton also added that over the last 76 years since the Howey test has been established, there’s not a single case wherein the underlying asset in an investment contract has been always considered a security. He further argued:
But they (SEC) cannot credibly argue the SEC’s theory in the Ripple case, shown by citing the actual briefs by the SEC, is supported by the law or protects investors. I’ve said the SEC snatched defeat from the jaws of victory b/c of this absurd over broad theory.
Ripple CEO Praises XRP Army
In the latest, Ripple CEO Brad Garlinghouse praised the members of the XRP community for extending their support throughout the legal battle with the U.S. Securities and Exchange Commission (SEC). Following a meeting with some XRP community members at the XRP Las Vegas 2023 event, Garlinghouse tweeted:
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Great to meet so many folks from the XRP community at #XRPLasVegas2023 – the camaraderie is remarkable (and an amazing feeling in person vs Twitter!) This community has stood by and supported Team Ripple as we have fought the good fight…I can’t adequately express my gratitude.
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