Attorney Deaton Says, “SEC Calling an Asset a Security Does NOT Mean It is a Security”

The United State Securities and Exchange Commission (SEC) has been on the neck of prominent crypto platforms and their CEOs with several charges and claims.

However, prominent attorney Deaton has recently raised an important point, reminding the crypto community that just because the SEC labels an asset as a security does not necessarily mean it is a security.

Notably, as cryptocurrencies gain widespread adoption and mainstream attention, questions surrounding their classification and regulating standards have become a point of debate.

Deaton Reacts to SEC Labeling Multiple Assets as Securities

The founder of CryptoLaw, John Deaton, recently expressed his concerns about the SEC’s classification of assets as securities.

Deaton clarified that just because the SEC classifies an asset as a security does not automatically mean that the asset possesses all the characteristics typically associated with traditional securities like stocks, bonds, or investment contracts.

According to Deaton, “Everyone needs to remember the SEC calling an asset a security does NOT mean it is a security,”

He further noted that the SEC had once admitted that the Court is responsible for deciding whether its theory is valid.

Attorney Deaton shared a document containing the United States Securities and Exchange Commission’s (SEC) response to his Writ of Mandamus. The document reveals that the SEC affirms the court’s authority in determining the validity of its theory. 

Deaton drew attention to a specific excerpt from the document, stating:

“Thus, the commission’s enforcement proceeding in the Southern District of New York, brought under the Securities Act, supplies the exclusive method for testing the Commission’s complaint against Ripple.”

Chances of Ripple Winning The SEC’s Case is Higher, Says Deaton

During a recent episode of The Good Morning Crypto podcast on June 3, attorney Deaton provided his analysis and predictions regarding the Ripple case. John Deaton believes Ripple has a 25% chance of achieving a complete victory in the ongoing legal battle against the US SEC.

Additionally, he suggests a 50% likelihood of a “splitting the baby” ruling, where Judge Analisa Torres could rule that XRP was indeed offered as an unregistered security prior to 2018. In contrast, the term “splitting the baby” refers to a state in which the Judge decides to favor both parties (SEC vs. Ripple) partially.

Deaton believes that the chance of the US SEC winning the case is less than 3% suggesting that the SEC lacks the needed strength to secure complete victory in the litigation.

He further stressed a favorable outcome for Ripple could impact the native asset XRP massively and potentially lead to it relisting on top crypto exchanges.

Meanwhile, the long-awaited Hinman document has been released at the time of writing, increasing speculations about the SEC Vs. Ripple case outcome. 

It has also sent XRP trading volume skyrocketing by 111.82% while the price has tanked by 0.57% based on CoinMarketCap data at the time of writing.