Ripple Lawyer Challenges SEC’s Classification Of XRP As Security, Citing Government Agencies’ Statements

Recently Twitter thread, pro-Ripple attorney John Deaton brought a strong case arguing that the US Securities and Exchange Commission (SEC) wrongly marked XRP coins as a security.

READ THIS 🧵 AND I CHALLENGE ANYONE TO TRY AND DEFEND THE ACTIONS AND CONDUCT OF THE SEC.

Deaton challenged the SEC’s claims by referencing statements from Bill Hinman, Director of the Division of Corporate Finance at the SEC, who said in 2018 that a digital asset is more likely to be considered a security if it is “sold as part of an investment – ​​to a non-user – by a promoter.”

Deaton argues that this does not apply to XRP holders, many of whom acquire coins to build TrustLine with XRPLedger for value transfers or payroll through BitPay and other vendors.

Deaton also points to the SEC’s own framework for digital assets, stating that crypto is unlikely to meet Howey’s test (which determines whether an asset is a security) if it “can be immediately used to make payments in a variety of contexts, or act as a substitute for real currency ( or fiats).

Ripple XRP And Other Government Agencies

The attorneys further highlighted statements from other government agencies, such as the US Government Accountability Office (USGAO) and FinCEN, which have classified XRP as a virtual currency.

Also consider that in 2019, the FSOC annual report signed by the most important financial leaders in the United States 🇺🇸 highlighted only the following virtual currencies – as market share grows: #BTC , #ETH, #XRP and #LTC. https://t.co/NFVZ14Gtda

He also referenced a 2015 settlement between Ripple and FinCEN & DOJ, which forced Ripple to comply with banking laws rather than securities laws and required the company to hire an independent third-party auditor to provide the government with an annual audit of all XRP sales for five years.

Deaton argues that the SEC’s approach to crypto is inconsistent and contradictory, referencing the fact that SEC staff were permitted to own and trade XRP until April 2019.

The agency took no action when MoneyGram filed disclosures with the SEC in 2019, notifying them that Ripple would transfer XRP to them for use in their cross-border payments business.

He also suggested that more non-public information would further support Ripple’s case. John Deton says:

What I discussed above is public. It does not consider non-public information. Now, wait until we see Hinman’s email and a draft of his speech.

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