In a recent release, attorney John Deaton, the founder CryptoLaw has disclosed how the U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler is pushing the boundaries of the law, citing the XRP lawsuit filed against Ripple.
In the lawsuit initiated against Ripple in 2020, the U.S. SEC alleges that the cross-border payments firm and its executives illegally sold XRP — the sixth largest crypto by market cap — to investors without first registering it as a security. However, Ripple continues to dispute this claim in court, maintaining that the token is a digital asset and not a security.
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Per a recent Bloomberg post, Deaton has made his opinion known regarding the XRP lawsuit. According to him, the SEC’s claims that XRP is a security is beyond what was considered by law and related court rulings in 1946 on what constitutes a security. He implied that Gensler is straying into dangerous territories with his overreaching acts.
He wrote, “The US Supreme Court issued the landmark SEC v. Howey decision in 1946, laying out a specific definition of what constitutes a security. Those justices couldn’t have guessed how complex digital commerce over encrypted lines of computer code would fit in almost a century later. This goes beyond anything the 1933 Securities Act and over 250 federal appellate and Supreme Court decisions about securities law ever imagined”
The pro-XRP lawyer in his opinion portrays that a regulatory framework would be best for the crypto industry, but Gensler’s idea that cryptocurrencies should be handled as securities pose dangerous legal and economic implications.
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Deaton said, “The Securities and Exchange Commission under Chairman Gary Gensler has its own idea of how cryptocurrencies should be regulated today, but bears little resemblance to that decision—and it’s straying into dangerous legal territory in court.”
“I’m all for clear rules and regulations to protect people. But the SEC is exploiting legal uncertainty about crypto to radically redefine what constitutes an investment contract and a common enterprise in the US,” he added.
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