Legal expert John Deaton, well-known for his expertise in the field, has provided his insights into the ongoing controversy surrounding the sales of XRP by Ripple executives.
Critical document surfaces on Twitter
In a significant development, Twitter user Steven Mizrahie recently posted a critical document, coinciding with the submission of public, redacted versions of cross-motions for summary judgment by the relevant parties involved. The document, sent to the U.S. Securities and Exchange Commission (SEC), presents an analysis of XRP and asserts that the crypto asset does not meet all the criteria of the Howey Test—a legal standard employed in the U.S. to classify transactions as securities.
Decoding The Economic Realities
The document emphasizes that determining whether a transaction involves a security should not rely solely on its label, but rather on an evaluation of the transaction’s underlying economic realities. Through a comprehensive analysis of XRP’s features, terms, original development, distribution, current functionality, usage, and the role of its initial promoters, it argues that there are substantial grounds to conclude that XRP does not fulfill all the elements of the Howey Test.
Read More About This: Ripple Vs SEC News: XRP Challenges Security Status with Howey Analysis Memo!
Therefore, it contends that XRP should not be categorized as an “investment contract” or a “security” under the Securities Act or the Exchange Act.
Steven Mizrahie, the Twitter user who shared the document, suggested that if the SEC were the document’s author, the Commission’s case would be considerably weakened. However, Marc Fagel, another Twitter user, clarified that Ripple’s brief stated that an unidentified third party had drafted the document. Fagel, who had no access to the exhibit itself, was unable to verify the identity of the document’s author.
John Deaton Intervenes
It was at this point that John Deaton decided to weigh in on the matter. The advocate for XRP, John Deaton, responded by stating that the document was not written by SEC staff. He revealed that the document, dated June 13, 2018, and authored by SEC staff, was classified as privileged and therefore not shared with Ripple.
Instead, the document made public was an analysis by a third party, which was sent to the SEC.