Lawyer Backs Ripple in Legal Battle Over XRP’s Status as Security

SNEAK PEEK

• Attorney John E. Deaton contests SEC’s case, calling it based on a “far-fetched” Howey test interpretation.
• Deaton criticizes SEC’s theory that XRP in the secondary market is an investment contract.
• Lawyer Bill Morgan cautions that the SEC’s argument would classify other digital assets as securities.

Bill Morgan, a lawyer and digital asset expert, has voiced his support for the impeccable reasoning of attorney John E Deaton in the SEC v. Ripple case. The ongoing legal battle centers around whether the digital asset XRP is a security. Deaton has argued that the Securities and Exchange Commission’s (SEC) case against Ripple is based on a “far-fetched” and “indefinable” interpretation of the Howey test that sets the legal definition of security.

Impeccable Deaton reasoning IMHO. And if there was any doubt about how broadly the SEC has tried to stretch the Howey test in the Ripple case (to the asset itself) even if the judge Torres sidesteps ruling on secondary market sales that doubt should be dispelled by the fact /1 https://t.co/BsywekIxmv

— bill morgan (@Belisarius2020) May 5, 2023

Deaton accused the SEC of taking shortcuts in its case against Ripple and of stretching the Howey test so broadly that it covers all sales of XRP, even those in the far-off future. He also criticized the SEC’s theory that XRP in the secondary market represents an investment contract, pointing out that the agency had failed to cite any precedent or authority supporting such a claim.

Morgan added that the SEC’s argument about XRP in the secondary market is so broad that it would classify other digital assets like Algorand and Dash as securities, even when sold in the secondary market. This would have significant implications for the entire crypto industry.

The crypto industry has closely watched the Ripple case as it could have far-reaching consequences for classifying digital assets. If the court rules that XRP is a security, it would mean that Ripple has been selling unregistered securities for years. This would open up Ripple and its executives to severe penalties and could set a precedent for the SEC to go after other digital assets that it deems to be securities.

As the legal battle continues, the crypto industry eagerly awaits the court’s ruling on whether XRP is a security. Until then, the outcome of the case remains uncertain, and the future of XRP and other digital assets hangs in the balance.