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John Deaton, a prominent supporter of Ripple, has conveyed a positive outlook regarding the ongoing litigation between the U.S. Securities and Exchange Commission (SEC) and Ripple. Deaton is confident that Judge Torres, who is overseeing the case, will comprehensively evaluate whether XRP qualifies as a security in her forthcoming summary judgment. Through a series of tweets, Deaton contends that XRP should not be categorized as a security and draws comparisons to various assets to bolster his argument. He also anticipates that Judge Torres will tackle the matter of secondary sales, contrary to the expectations of some seasoned attorneys.
XRP’s Classification and Comparison to Other Assets:
Deaton strongly maintains that “XRP IS NOT A SECURITY” and likens it to assets such as orange groves, whiskey, condominiums, and Bitcoin (BTC). He argues that even though these assets were marketed and sold as investment contracts, their fundamental characteristics remain unchanged. Deaton notes that although Bitcoin was initially offered as an investment contract, it is now recognized as a digital commodity.
Addressing Secondary Market Sales:
In contrast to the views of some legal professionals, Deaton is of the opinion that Judge Torres will take a decisive stance on the issue of secondary market sales of XRP. He asserts that it would be an act of judicial activism to overlook the SEC’s theory and not engage with these matters. Deaton references a prior case involving Telegram, where Judge Castel ruled in favor of the SEC, indicating that Telegram was required to reimburse investors for their unsuccessful initial coin offering (ICO). However, Deaton underscores that the Telegram case involved an ICO with written contracts, which is not the case with XRP.
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Differences Between XRP and Telegram’s GRAM:
Deaton highlights that the SEC’s theory in the Ripple case is predicated on ongoing activity resembling an ICO, treating each sale of XRP as part of a larger scheme involving securities. However, he clarifies that XRP is distinct from the Telegram case as it did not involve written contracts and has been actively traded on the XRP Ledger (XRPL) for over seven years. Furthermore, Deaton points out that SEC personnel were allowed to hold XRP until 2019, which was not applicable to Telegram’s GRAM token.
Importance of Secondary Market Transactions:
The matter of secondary market transactions of XRP is pivotal in the SEC and Ripple legal dispute. The SEC alleges that Ripple offered XRP as an unregistered security. However, it fails to differentiate between Ripple’s direct sales and subsequent trading on the secondary market, resulting in ambiguity. Deaton proposes that Judge Torres may address this issue based on a prior analysis in the SEC vs LBRY lawsuit, offering additional clarity.
While outcomes cannot be guaranteed, John Deaton’s optimism arises from his conviction that Judge Torres will thoroughly examine the fundamental question of XRP’s security classification in the impending summary judgment. His arguments center around the intrinsic nature of XRP, comparisons to other assets, and expectations for addressing secondary market sales. The result of Judge Torres’ ruling could have significant implications for the cryptocurrency sector, illuminating the security status of XRP.
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