Ripple-SEC Lawsuit Update: Deaton Vs Gensler, Is Gary Gensler Sidestepping the Law?

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In a remarkable twist in the ongoing debate over cryptocurrency regulation, John Deaton has launched a stinging critique of Gary Gensler’s position on crypto tokens. Citing a recent video interview where Gensler commented on the applicability of securities laws to most industry tokens, Deaton landed a verbal blow, asserting these laws, according to the Howey test, do not apply to these tokens.

The Howey test, a standard in U.S. law derived from a Supreme Court case, is used to determine whether a transaction qualifies as an “investment contract” and thus a security. Deaton argued that securities laws could apply to the “offer and sale of tokens, including Bitcoin”, drawing parallels with a past case, SEC v. Shaver’s in 2013.

John Deaton’s Counterpunch

Deaton suggested that Gensler might be gaslighting the public with his stance. He called for an end to what he perceived as the SEC chair’s “ignoring of the law.” This issue — the application of securities laws to crypto — remains one of the most contentious in the digital currency space. Opinions vary widely, with top brass at the SEC and crypto leaders often expressing profoundly different interpretations of the status of these emerging assets.

The Legal Battle is Not Over

These divergent interpretations are fueling a number of high-profile lawsuits against top players in the industry, including major exchanges such as Kraken, Coinbase, and Binance.

Despite a recent ruling by Judge Analisa Torres that XRP itself is not a security, the SEC remains unappeased, with whispers of a potential appeal circulating. The ultimate verdict on the status of crypto may very well end up being decided at the Supreme Court level.

Why are XRP users targeted?

Deaton also tweeted that the threat of the SEC prevailing in its case hung heavily over XRP holders and anyone involved with digital assets. He highlighted that the SEC’s regulatory stance had created a sense of uncertainty, as any digital asset could potentially be targeted and replaced under similar circumstances. Deaton characterized the SEC’s approach as a “bald-faced regulatory land grab,” suggesting that the commission’s actions were an attempt to expand its regulatory reach.