July 23, 2024
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Blockchain News

Pro-Ripple Lawyer Expresses Optimism on XRP’s Security Status in SEC Lawsuit

John Deaton, a vocal advocate for Ripple, has expressed optimism regarding the ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple. Deaton believes that Judge Torres, presiding over the case, will thoroughly address whether XRP is a security in her upcoming summary judgment. In a series of tweets, Deaton argues that XRP should not be classified as a security and draws parallels to various assets to support his stance. He also expects Judge Torres to address the issue of secondary sales, unlike what some experienced lawyers anticipate.

XRP’s Classification and Comparison to Other Assets:

Deaton firmly asserts that “XRP IS NOT A SECURITY” and draws comparisons to assets such as orange groves, whiskey, condos, and Bitcoin (BTC). He argues that despite being marketed and sold as investment contracts, the inherent characteristics of these assets remain unchanged. Deaton points out that even though Bitcoin was initially sold as an investment contract, yet it is recognized as a digital commodity.

Addressing Secondary Market Sales:

Contrary to the expectations of some legal experts, Deaton believes that Judge Torres will be bold in addressing the issue of secondary market sales of XRP. He states that it would be an act of judicial activism to ignore the SEC’s theory and not address these issues. Deaton refers to a previous case involving Telegram, where Judge Castel ruled in favor of the SEC, stating that Telegram had to repay investors for their unsuccessful initial coin offering (ICO). However, Deaton highlights that the Telegram case involved an ICO with written contracts, unlike the situation with XRP.

Differences Between XRP and Telegram’s GRAM:

Deaton emphasizes that the SEC’s theory in the Ripple case is based on continuous activity resembling an ICO while considering each sale of XRP as part of a broader plan involving securities. However, he clarifies that XRP differs from the Telegram case as it did not involve written contracts and had been openly traded on the XRP Ledger (XRPL) for over seven years. Additionally, Deaton notes that SEC staff members were permitted to own XRP until 2019, which was not the case with Telegram’s GRAM token.

Importance of Secondary Market Transactions:

The issue of secondary market transactions of XRP is crucial in the SEC and Ripple legal battle. The SEC accuses Ripple of offering XRP as an unregistered security. Still, it fails to distinguish between Ripple’s direct sales and subsequent trading on the secondary market, leading to confusion. Deaton suggests that Judge Torres may address this issue based on a previous examination in the SEC vs LBRY lawsuit, providing further insight.

While there are no guarantees, John Deaton’s optimism stems from his belief that Judge Torres will thoroughly address the core question of XRP’s security classification in the upcoming summary judgment. His arguments revolve around the inherent nature of XRP, comparisons to other assets, and expectations for addressing secondary market sales. The outcome of Judge Torres’ decision could significantly impact the cryptocurrency industry, shedding light on the security status of XRP.