Lawyer John Deaton expresses optimism in Ripple’s legal battle against the SEC, arguing that XRP is not a security and highlighting the potential for a favorable outcome in the case.
Key Points
- John Deaton expresses optimism regarding the outcome of Ripple’s legal battle against the SEC, firmly believing that “XRP IS NOT A SECURITY.”
- Deaton draws parallels between XRP and other assets, highlighting their inherent characteristics despite being marketed as investment contracts.
- Deaton argues that Judge Torres will address the issue of secondary sales in the SEC vs Ripple lawsuit, referencing a similar case involving Telegram.
John Deaton, a prominent lawyer who supports Ripple in their ongoing legal battle against the U.S. Securities and Exchange Commission (SEC), has shared his optimism regarding the outcome of the lawsuit.
In a series of Twitter posts on Monday, Deaton made it clear that he firmly believes “XRP IS NOT A SECURITY.” He went on to draw parallels between XRP and various other assets, including orange groves, whiskey, condos, and even Bitcoin (BTC). Deaton argued that despite being marketed and sold as investment contracts, these assets still possess their inherent characteristics.
If Ripple loses to the SEC there won’t be any money collected for years and ONLY if Ripple loses on appeal. If the Supreme Court takes it on appeal (which I believe they will if Congress hasn’t acted by then), I believe Ripple hands down wins with this Supreme Court. If the SEC… https://t.co/0xHw266YXf
— John E Deaton (@JohnEDeaton1) July 6, 2023
Deaton Point of View
Deaton also highlighted a previous case involving Bitcoin, in which the SEC argued that BTC should be classified as a security. However, the court ultimately ruled in favor of Bitcoin, recognizing it as a digital commodity.
Contrary to the expectations of many lawyers, Deaton expressed his confidence that Judge Torres, who is presiding over the SEC vs Ripple lawsuit, will address the issue of secondary sales regarding XRP. According to Deaton, it would be “a greater act of judicial activism” for the judge to ignore the SEC’s theory and not tackle these issues.
To support his argument, Deaton referred to a similar case involving the messaging app Telegram, where the SEC intervened and prevented the company from distributing GRAM tokens. The court ruled in favor of the SEC, stating that Telegram had to refund investors $1.2 billion from their failed initial coin offering (ICO) for the Telegram Open Network. However, Deaton clarified that the Telegram case involved an ICO with written contracts, while the situation with XRP is different.
Deaton emphasized that XRP has been openly traded for over seven years, functioning effectively on the XRP Ledger (XRPL) technology. He also noted that even SEC staff members were allowed to own XRP until 2019, which was not the case with the GRAM token.
The issue of secondary market transactions of XRP has been a significant point of contention in the SEC and Ripple legal battle. The SEC accused Ripple of offering XRP as an unregistered security, but it did not clearly differentiate between Ripple’s direct sales and subsequent trading on the secondary market, causing confusion. Deaton suggested that Judge Torres might address this issue based on a previous examination in the SEC vs LBRY lawsuit.
While there is no guarantee, the summary judgment decision by Judge Torres could potentially provide clarity on whether XRP should be classified as a security. The outcome of this ruling could have significant implications for the entire cryptocurrency industry.
