Pro-Ripple attorney says XRP could be sold as a security in primary market
|- Ripple proponent attorney John Deaton argues digital assets can be sold as a security in the primary market, but not in the secondary.
- The attorney says digital assets like XRP and Bitcoin are not securities.
- The comments open the door to a possible settlement in the SEC vs. Ripple case.
Attorney John Deaton, known as amicus curiae or an impartial adviser to the court of law in SEC v. Ripple, said that digital assets aren’t securities, but can be treated as such when they are exchanged in the primary market. The comments could pave the way for a settlement between the US Securities Exchange Commission (SEC) and payment firm Ripple.
The Ripple proponent said that digital assets in itself are not securities, but they may be sold as one under certain circumstances. This requires an examination of each transaction in primary and secondary sales involving XRP.
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Attorney John Deaton says XRP is a security on this condition
The founder of Crypto Law argues that digital assets like XRP and Bitcoin are not securities by themselves citing the Howey Test.
However, in the event of the sale of a digital asset like XRP, the asset acts as a security in the transaction. Thus, each sale in both the primary and secondary markets needs to be examined by the SEC.
Deaton substantiated his argument by drawing precedents from similar lawsuits..
Can we get something straight. Digital assets themselves are NOT securities, any more than anwas in Howey, or #BTC was in Shavers, or s were Kemmerer, or Chinchillas were in Miller v. Chinchilla, or condos were in SEC Rel. No. 33-5247. Crypto assets can be sold as a security.
— John E Deaton (@JohnEDeaton1) May 10, 2023
Can we get something straight. Digital assets themselves are NOT securities, any more than anwas in Howey, or #BTC was in Shavers, or s were Kemmerer, or Chinchillas were in Miller v. Chinchilla, or condos were in SEC Rel. No. 33-5247. Crypto assets can be sold as a security.
— John E Deaton (@JohnEDeaton1) May 10, 2023
Deaton explained that the interpretation that “tokens are investment contracts” is false and that the SEC is not arguing it. The Ripple proponent refers to the SEC vs. LBRY case, where the judge ruled that secondary sales of LBRY are not considered securities sales.
Like I’ve said before, respectfully, if your interpretation was correct the SEC would be arguing it. They don’t. Go to https://t.co/zpFLRACNXl and go to the LBRY case and read the transcript from the Nov. 21 hearing. If your theory was on point, that entire hearing was useless.
— John E Deaton (@JohnEDeaton1) May 10, 2023
Like I’ve said before, respectfully, if your interpretation was correct the SEC would be arguing it. They don’t. Go to https://t.co/zpFLRACNXl and go to the LBRY case and read the transcript from the Nov. 21 hearing. If your theory was on point, that entire hearing was useless.
— John E Deaton (@JohnEDeaton1) May 10, 2023
Why does this development matter?
Accepting that XRP is not a security in itself but may be “sold as one” could change the expected outcome of the SEC’s case against Ripple. Similar to the LBRY case, where the SEC admitted on record that the sale of LBRY Credits (LBC) tokens in the secondary market doesn’t constitute security, a similar settlement becomes likely in the legal battle against Ripple.
While the XRP Army is awaiting a win for the payment giant, another positive outcome for the altcoin’s holders may come in the form of a settlement where the asset is considered a security only in primary sales, or those carried out by Ripple and its executives.
In this case, sales of XRP in the secondary market may be exempt from being considered a security.
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