Ripple Vs SEC News: XRP Lawyer Slams SEC, Says Their Arguments are Ridiculous and Shameful

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Pro-XRP lawyer John Deaton explained how the SEC had a strong case but has now undermined its own position. The quoted legal document, referenced as “ECF 640,” appeared to support this claim by stating that the purchase of XRP was an investment of money into a common enterprise. 

Deaton also criticized the SEC’s argument by saying that it is so far-fetched that it extends beyond the present and into the future, capturing all possible future sales, even in countries that may recognize XRP as a fiat currency in the future.

The quoted legal document supports this by stating that even if some country recognizes XRP as fiat currency in the future, it would still be considered a security.

“The SEC’s theory is the equivalent of arguing individual oranges were not only oranges, but also represented the investment contract with the W.J. Howey Company. The SEC’s theory would be a bit amusing if innocent holders weren’t being severely harmed.”

The Howey scope

Deaton argued that the SEC is not allowed to shortcut the Howey analysis (a legal test used to determine whether a transaction involves an investment contract), by simply alleging that each and every sale of XRP, from the beginning of time until the end of the world, meets all three prongs of the Howey test.

He asserts that in the 76 years since the Howey test was established, there has not been a single case where the underlying asset in an investment contract was always considered a security. 

According to him, there has not been a single case where an investment contract was found, and there was no privity (a legal relationship) between the buyer and the promoter. The tweet suggests that this argument by the SEC is ridiculous and that the lawyers at the SEC should be ashamed of themselves.

“But they cannot credibly argue the SEC’s theory in the Ripple case, shown  by citing the actual briefs by the SEC, is supported by the law or protects investors. I’ve said the SEC snatched defeat from the jaws of victory b/c of this absurd over broad theory.”