Pro-XRP lawyer John Deaton has spotted evidence in a Ripple document suggesting that XRP was indeed discussed by SEC staff before the Hinman speech.
Pro-XRP lawyer John Deaton believes that a little-known footnote in a Ripple document from last year could have an impact on the ongoing conflict between Ripple and the US securities regulator.
On May 22, pro-XRP lawyer John Deaton shared on Twitter that he had discovered a brief footnote in a Ripple legal document. According to Deaton, the footnote confirmed that XRP had been discussed among SEC staff before the Hinman speech.
This discovery could be important because internal discussions among SEC officials regarding the classification of XRP as a security or not may influence the outcome of the lawsuit between the SEC and Ripple.
Read this short 🧵 please. When you look at all the other SEC-LIT-EMAILS cited in Ripple’s opposition, they are redacted. The one about there being reasonable grounds to not believe XRP satisfies all the Howey factors is not redacted. https://t.co/qoaCbjk7rg pic.twitter.com/Nc6kfNMJ4c
— John E Deaton (@JohnEDeaton1) May 21, 2023
In December 2020, the SEC filed a lawsuit against Ripple, accusing them of selling their cryptocurrency, XRP, without proper registration as a securities offering.
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Ripple has rejected the claim that XRP is a security, stating that it does not meet the requirements outlined in the Howey Test, which is used to determine if a transaction qualifies as a security transaction.
According to Deaton, the footnote, which he believes is from an external source not affiliated with the SEC, indicated that there are valid reasons to believe that XRP does not meet all the requirements of the Howey Analysis and, as a result, should not be considered a “security” under federal securities laws.
During a Twitter Spaces event on May 22, hosted by Fox Business journalist Eleanor Terrett, Deaton expressed his interpretation that the mentioned footnote indicates a discussion about XRP took place within the SEC. According to Deaton, the inclusion of the statement in the email chain or citation by someone at the SEC suggests that it was not an official from the SEC who made the statement about XRP not being a security. Deaton expressed a high level of confidence, around 95%, that the statement came from an external source. He considered this development significant, as it aligns with the beliefs and assumptions held by many individuals involved in the litigation.
Deaton pointed out that the SEC has not officially confirmed whether there were internal discussions about XRP. However, he did highlight that in June 2018, XRP held the position of the third largest cryptocurrency by market capitalization, following Bitcoin and Ethereum.
According to Deaton, during Hinman’s Speech, it was mentioned that Bitcoin and Ethereum were not considered securities. He suggests that there may have been individuals at the SEC who held the view that XRP should be treated similarly to Bitcoin and Ethereum in this regard.
Why give the speech(Hinman ETH Free Pass)? 🎯🎯🎯 pic.twitter.com/TQ28VP5mUc
— Digital Asset Investor (@digitalassetbuy) May 21, 2023
Deaton stated that there was information indicating that market participants did not view XRP as a security. He emphasized that this confirmation aligns with the assertions made by XRP holders over the past few years.
Deaton highlighted that the distinguishing factor was the citation “SEC-LIT” in contrast to the citation “SEC-PROD” used in other emails mentioned.
- Deaton clarified that the mentioned documents are related to the emails and speech drafts of Hinman, which the SEC opposed sharing but were still necessary for legal proceedings.
- In a tweet, Deaton expressed his belief that the statement regarding XRP not satisfying the Howey Test is not a direct quote from a senior SEC official, as it would have been redacted if it were.
Deaton mentioned that it is important for the community to pay attention to June 13, as it will reveal the extent to which this information will affect the case. This is when the Hinman materials are expected to be unsealed.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
