Home » Ripple vs. SEC: John Deaton Highlights Weaknesses in SEC’s Case Against XRP

Ripple vs. SEC: John Deaton Highlights Weaknesses in SEC’s Case Against XRP

Ripple's strong legal defense has put the SEC in a challenging position, with the outcome of the case hanging in the balance.

by Isaac lane
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Recently, prominent lawyer John Deaton, Founder of CryptolawUS and representative of XRP holders, along with crypto enthusiast Nietzbux, have raised important questions regarding the U.S. Securities and Exchange Commission’s (SEC) case against Ripple. Their observations shed light on the SEC’s difficulties in making a convincing argument that XRP should be classified as a security.

Challenging the Howey Test Requirements

Nietzbux’s analysis suggests that Ripple’s legal defense has exposed shortcomings in the SEC’s case, particularly in relation to the Howey Test. This test is vital in determining whether an asset qualifies as a security, and Nietzbux argues that not all the Howey Test requirements were met, which is a crucial point for the SEC to prove.

John Deaton’s Critical Amicus Brief

John Deaton submitted an amicus brief that critically examined the SEC’s case. He pointed out several weaknesses, including the SEC’s reliance on outdated and speculative evidence. For instance, the SEC referenced a 2014 tweet by Chris Larsen, Ripple’s co-founder, but failed to provide evidence that any of the six named XRP holders in their motion to intervene were active on Twitter in 2014.

Additionally, Deaton highlighted that the SEC used a 2014 brochure aimed at potential investors as evidence, but failed to establish that these investors actually relied on the brochure when purchasing XRP. Deaton also discredited the SEC’s reliance on Ripple’s website as evidence, noting that other non-Ripple entities, like CNBC, provided similar information.

Questioning the SEC’s Motives

In a thought-provoking conclusion, John Deaton questioned the true motivations behind the SEC’s case, suggesting it may have been “dead in the water from the start.” This raises concerns about whether the SEC’s objectives in this high-profile case extend beyond upholding securities laws.

Nietzbux echoed Deaton’s arguments, asserting that the SEC was “out-lawyered” by Ripple. He stated that the SEC appeared to be “objectively wrong on the facts.” Ultimately, the core issue seems to revolve around the SEC’s ability to convince the courts, rather than the simple classification of XRP as a security.

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