- According to Deaton, the SEC is applying a double standard in the case against Ripple in consideration of fundraising by the Ethereum Foundation.
- Deaton’s motion to intervene remains open, with Judge Torres granting Deaton leave to represent the proposed intervenors on Monday.
Attorney John E. Deaton continues to fight for the XRP community, seeking arguments as to why the U.S. Securities and Exchange Commission (SEC) is wrong in classifying XRP as a security. In a Twitter thread yesterday, Deaton laid out why the Ethereum Foundation’s sales of Ether (ETH) met the facts for a security much more than any sales of XRP by Ripple that he is aware of.
In doing so, Deaton specifically referenced a video shared by “Digital Asset Investor” via Twitter in which Ethereum’s creator, Vitalik Buterin, spoke about the initial fundraising and transfer of 500,000 ETH to Galaxy Digital’s Mike Novogratz. Deaton explained:
What @VitalikButerin is doing in the below video is much more of an “offering” of a security than any specific sale of #XRP that I’m aware of – (although I’m not aware of all #XRP sales).
As Deaton claims, the transfer of 500,000 ETH to Novogratz by the Ethereum Foundation is a much clearer example of the sale of an unregistered security than what is in the SEC’s hands against Ripple.
— John E Deaton (@JohnEDeaton1) March 23, 2021
Who benefited from the lawsuit against Ripple?
Deaton and the video refer to the “pre-mine” that the Ethereum team conducted in 2014/2015. The team had set up three pools prior to the launch of the network to pre-mine ETH according to the fundraising collected, for the co-founders and early team members as well as the Ethereum Foundation.
The pre-mined ETH were then sold to early investors, which included Novogratz (who bought half a million Ether at $0.99). In relation to this, Deaton argues:
Let’s assume #XRP JUST LIKE #ETH was a security between 2013-2017. Why the selective enforcement? Many have argued that it’s all about the ESCROW! I agree that the escrow is a relevant factor. But the escrow doesn’t turn it into a security.
In this context, Deaton also raised the question of what the motive of the lawsuit was – as did former SEC Commissioner Joseph Grundfest. Just a few days ago, the SEC refused to release its documents on the classification of Bitcoin and Ethereum as non-securities. As Jeremy Hogan stated, the SEC is apparently trying to hide something damning, which is why Ripple may be trying to obtain those documents. Along those lines, Deaton stated:
When this case was filed against Ripple, individuals at the SEC knew that it would face problems & hurdles prosecuting this case. […] Was the filing of the Complaint itself, the goal? Was the Complaint the weapon?
The relevant question isn’t who will be harmed by the mere filing of the Complaint. The relevant question is who benefited by the mere filing of the Complaint (causing the harm)? It’s not that someone was against #XRP per se but favored or promoted #BTC and #ETH and ?
Motion to intervene by XRP holders remains open
Meanwhile, Deaton has at least taken the first step for intervention on behalf of over 10,000 XRP holders in the lawsuit between Ripple and the SEC. On Monday, Judge Analisa Torres granted Deaton permission to appear in her court for all purposes as counsel for the proposed intervenors. However, a decision on the motion to intervene is still pending.