XRP Advocate Challenges SEC’s Securities Classification as Ripple Awaits Favorable Verdict

XRP advocate Deaton has recently challenged SEC’s classification of secondary sales as securities, while Ripple awaits a favorable verdict in ongoing legal battle.

Deaton Challenges SEC’s Classification of XRP Sales as Securities, Ripple Awaits Favorable Verdict

John Deaton, a well-known lawyer who supports XRP and founded CryptoLaw, has put forth a strong opinion challenging the United States Securities and Exchange Commission (SEC)’s reasoning behind categorizing secondary sales of XRP as securities. According to Deaton, the SEC does not have sufficient grounds to justify this classification.

When Marc Fagel, a former partner at Gibson law firm, posted a tweet, Deaton responded with a hypothetical situation. Deaton described a scenario where XRP, the cryptocurrency associated with Ripple, was used as a means of payment by Ripple to four different entities, showcasing a progressive movement of the cryptocurrency.

“If you don’t apply Howey at the time of each transaction and XRP is a security per se b/c Ripple sold to a guy named Johnny Crypto then, in effect, Johnny Crypto, his employee, the employee’s friend, Jeremy Hogan, Uphold, and TapJets are all in a common enterprise w/Ripple,” Deaton said.

Moreover, Deaton referenced the 2nd Circuit, which states that if a purchaser is motivated by the intent to use or consume the purchased item, securities laws do not apply. This further supports Deaton’s argument that secondary XRP sales do not meet the criteria for classification as securities.

Deaton had previously raised concerns about SEC Chair Gary Gensler’s approach to cryptocurrencies in relation to the Howey Test. He believes that Gensler’s perspective on how cryptocurrencies should be classified and regulated diverges from the court’s definition of securities established in 1946 through the Howey Test.

The ongoing legal battle between Ripple and the SEC regarding the alleged unregistered sale of XRP as securities has been prolonged. However, it is anticipated that a verdict will be reached in the coming months.

Ripple is optimistic that the case will conclude favorably by the end of the year, with CEO Brad Garlinghouse expressing hope for a verdict in the first half of the year. The disclosure of the Hinman speech, despite initial resistance from regulators, has significantly impacted the case’s trajectory.

Ripple vs. SEC Lawsuit – Recent Developments, Optimism, and Potential Implications

The Ripple Labs vs. Securities and Exchange Commission (SEC) lawsuit in December 2020 marked a significant clash between a cryptocurrency company and regulatory authorities. The SEC accused Ripple of selling unregistered securities and raising $1.8 billion through XRP token sales. As the case approaches a crucial juncture, let’s explore recent developments and potential outcomes.

Despite the legal complexities, Ripple remains confident in its position. Stuart Alderoty, Ripple’s Chief Legal Officer, believes they will win the case, citing the SEC’s track record of losing four out of five cases in the Supreme Court.

Ripple has also secured significant victories, such as the court denying the SEC’s request to access executives’ personal financial records, deeming it irrelevant. Additionally, the court supported Ripple’s argument that the SEC failed to provide fair notice about XRP’s sale as a securities transaction, potentially weakening the SEC’s case and revealing regulatory uncertainties for companies like Ripple.

Judge Sarah Netburn’s decision to grant Ripple access to the SEC’s internal communications about Bitcoin and Ethereum is another crucial win.

Documents released regarding former SEC director William Hinman’s 2018 speech had raised questions about the SEC’s credibility and its impact on the lawsuit. In response, Ripple called for an investigation challenging the SEC’s claim that the speech was Hinman’s opinion.

Ripple CEO Brad Garlinghouse remains optimistic about a resolution in 2023 but acknowledges the SEC’s stance on most cryptocurrencies as securities limits the possibility of a settlement.

According to XRP lawyer John Deaton, the SEC has less than a 3% chance of outright victory against Ripple as the lawsuit nears its end. Deaton predicted a final decision by Judge Torres by September 30, 2023, based on the “six-month list” submitted to Congress.

As the Ripple-SEC lawsuit nears its resolution in its third year, Ripple has secured significant legal victories and remains optimistic.

The final outcome of the Ripple lawsuit could have profound implications for the global crypto market, setting a crucial legal precedent for other cryptocurrencies. It may spur rapid innovation and market activity.

Additionally, a favorable ruling for Ripple could potentially trigger a significant surge in value for XRP token holders. The XRP price could quickly reach its previous all-time high of $3.84 in no time.

Related Articles

1. How to Buy XRP?
2. Top Exchange CEO Says A Win for Ripple Is a Victory for Crypto
3. Navigating the Regulatory Landscape: Ripple’s Lawsuit and the Call for Clarity

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