- The XRP holders’ lawyers called out the absurdity of the SEC’s recent argument calling it a move to unlawfully expand the Howey Test.
- The SEC lawyer argued that “even if you buy a token w/ 100% percent intent on USING the token, but it can objectively be said that you COULD also expect a profit – it’s a security”.
The U.S. Securities and Exchange Commission (SEC) has continued to add more and more digital assets to its list of “security tokens”, especially after the crypto market crash this year. John Deaton, the lawyer representing XRP holders has recently warned about the SEC’s ambition to expand the Howey Test unlawfully.
Under the Securities Act of 1933 and the Securities Exchange Act of 1934, the Howey Test is used to determine whether any asset class qualifies as a security or not. With the ongoing SEC vs Ripple lawsuit, Deaton has asked crypto traders to be aware of the Commission’s recent activities. Deaton calls out the absurdity of the SEC’s arguments in @LBRYcom. The lawyers representing XRP holders noted:
The SEC lawyer argued that even if you buy a token w/ 100% percent intent on USING the token, but it can objectively be said that you COULD also expect a profit – it’s a security.
Everyone in Crypto & Congress must be made aware of the SEC’s unlawful expansion of Howey. The below argument was made by an SEC enforcement lawyer at the summary judgment argument in federal district court in NH. The Judge will be ruling within the next few months.
The risks involved for XRP investors and the crypto community
John Deaton said that if the argument gets the green light from the court, crypto traders can be in great danger. Because this will mean that simply owning an asset can lead them into a common enterprise.
As per the argument of the SEC lawyer, the utility of the asset will not matter. Even if the buyer buys an asset with the full intention of consumption, he/she can say to be expecting a price surge of security.
Deaton further argues that the investor community shouldn’t be linked with promoters. The U.S. SEC is also aware of the fact that investors can stake their digital assets independently of the promoters.
The Ripple vs SEC case has been going on for almost 20 months and has been taking new turns every week. Last week, the SEC blocked Ripple’s request of authenticating videos of seven officials.
Ripple Defendants request permission to serve non-party subpoenas to authenticate videos of seven SEC officials’ public remarks in connection with previous RFAs. SEC will not consent and SEC seeks to reopen discovery.
Two weeks back, Ripple CEO Brad Garlinghouse said that he’s confident of Ripple’s win in this case. He added: “I am betting that [Ripple will win the lawsuit] just to be clear. I am betting on that not just because of the tone of the questions from the Judge. I am betting on that because I know the facts are on our side. I am betting on that because the law is on our side”.