Attorney Deaton Highlights How XRP Lawsuit is Different from Telegram Case to Prove XRP is Not a Security

John Deaton, the lawyer representing over 75,0000 XRP holders, has recently reiterated that XRP is not a security, drawing a link between the embattled digital asset and Telegram’s GRAMME token.

Judge Analisa Torres Expected to Discuss XRP Secondary Market Sales

Deaton expressed optimism that in the SEC vs. Ripple case, Judge Analisa Torres would address the issue of XRP secondary market sales as well as the coin itself. His idea was in response to a remark he made last month.

Deaton disagrees with other experienced lawyers who believe the judge will not comment on the token. He claims that if Judge Torres does not address the underlying asset and XRP secondary market sales, he will disregard an important component of the SEC’s XRP theory.

Deaton expects Judge Torres will follow in the footsteps of Judge Kevin Castel, who commented on GRAMME secondary market sales during the SEC vs. Telegram lawsuit.

The Telegram lawsuit, in contrast to the Ripple case, involved a pure Initial Coin Offering (ICO) with written contracts. Deaton stated that Telegram intended to use the funds generated to further improve its platform and technologies. Despite this, the SEC secured a preliminary injunction and won on March 25, 2020.

Deaton also alluded to Judge Castel’s second judgment, in which he addressed GRAMME secondary market sales. He emphasized Judge Castel’s belief that access to the secondary market was part of the program by quoting a piece of the judgment.

“At the preliminary injunction stage,” Judge Castel stated, “the intended resale of Grammes by Telegram’s conduits into the secondary market is likely to involve U.S. purchasers and would likely satisfy Morrison’s transactional test.”

Deaton noted that some may perceive Judge Castel’s decision negatively in the Ripple-SEC case. Notably, there are fears that Judge Torres would rule that Ripple’s intention to establish XRP secondary markets was part of a scam.

Contrasting Ripple Case with Telegram’s Case

However, Deaton highlighted that the Ripple case is distinct from the Telegram case because the latter included a pure ICO without a functional platform. Deaton pointed out that, unlike XRP, the US Government Accountability Office did not consider GRAMME to be a virtual currency in 2014.

In addition, unlike XRP, the Financial Crimes Enforcement Network (FinCEN) did not recognize GRAMME as a virtual currency in 2015.

Deaton went on to say that, unlike XRP, GRAMME did not fit the standards specified in the 2019 SEC framework for digital assets. According to the research, if XRP is utilized for quick payments, it is unlikely to pass the Howey test.

Deaton also stated that MoneyGram did not use GRAMME in June 2019, instead opting for XRP for cross-border transfers. The payment giant notified the SEC in 2019 of its intention to use XRP in its worldwide business operations.

Deaton continued, “There weren’t businesses like Bailard Inc., who provided Ethics Disclosures in 2020 & 2021 assuring the SEC that they would only purchase and trade the three digital assets generally considered NON-securities by the SEC and the industry: BTC, ETH, and XRP.” GRAMME was left out!”

While Telegram planned to acquire cash for its network by selling GRAMME tokens, the XRP Ledger was already fully operating. According to Deaton, XRP has been publicly traded for 7.5 years, with SEC officials perhaps holding the coin during this time.

Finally, Deaton is confident that Judge Torres will address the issue of XRP secondary market sales and the token itself in her upcoming judgment. He emphasizes that ignoring these difficulties, the SEC’s approach would be a significant act of judicial activism.

---

Follow us on Twitter, Facebook, Telegram, and Google News