Pro-Ripple Attorneys Express Optimism About XRP’s Security Status in SEC Lawsuit

John Deaton, a vocal advocate for Ripple, has expressed optimism regarding the ongoing lawsuit between the US Securities and Exchange Commission (SEC) and Ripple. Deaton believes Judge Torres, who is presiding over the case, will thoroughly discuss whether XRP is a security in his forthcoming summary decision. In a series of tweets, Deaton argued that XRP should not be classified as a security and drew parallels with various assets to support its stance. He also expects Judge Torres to address the issue of the secondary sale, unlike some experienced lawyers anticipate.

Classification and Comparison of XRP with Other Assets:

Deaton emphatically insists that “XRP is NOT A SECURITY” and draws comparisons to assets such as orange groves, whiskey, condos, and Bitcoin (BTC). He argues that although marketed and sold as investment contracts, the inherent characteristics of the assets remain unchanged. Deaton points out that while Bitcoin was initially sold as an investment contract, it is recognized as a digital commodity.

Addressing Secondary Market Sales:

Contrary to the expectations of some legal experts, Deaton believes that Judge Torres will have the courage to tackle the issue of a secondary market sale of XRP. He stated that it would be an act of judicial activism to ignore SEC theory and not address the issue. Deaton was referring to a previous case involving Telegram, where Judge Castel ruled in favor of the SEC, alleging that Telegram should pay investors for their failed initial coin offering (ICO). However, Deaton highlighted that Telegram’s case involved an ICO with a written contract, unlike the situation with XRP.

Difference Between XRP and GRAM Telegram:

Deaton emphasized that the theory of the SEC in the case of Ripple is based on ongoing activity resembling an ICO while considering any sale of XRP as part of a broader plan involving securities. However, he clarified that XRP differs from the Telegram case in that it does not involve a written contract and has been openly traded on the XRP Ledger (XRPL) for more than seven years. Additionally, Deaton notes that SEC staff members are allowed to own XRP until 2019, which is not the case for Telegram’s GRAM token.

The Importance of Secondary Market Transactions:

The issue of XRP secondary market transactions is critical in the SEC and Ripple’s legal battle. The SEC accuses Ripple of offering XRP as an unregistered security. Still, it failed to differentiate between direct Ripple sales and subsequent trading on the secondary market, which led to confusion. Deaton suggested that Judge Torres could address this issue based on previous examinations in the SEC vs LBRY lawsuit, providing further insight.

While there are no guarantees, John Deaton’s optimism stems from his belief that Judge Torres will address core questions about XRP’s security classification thoroughly in an upcoming summary decision. Arguments revolve around the nature of XRP, comparisons to other assets, and expectations for handling secondary market sales. The outcome of Judge Torres’ decision could have a significant impact on the cryptocurrency industry, shedding light on XRP’s security status.