Renowned legal expert and Crypto-Law.US founder, John Deaton, has once again taken a swipe at the Securities and Exchange Commission (SEC), accusing the regulatory body of straying from its core mission and objectives.
Deaton argued that the SEC’s claim of XRP having no intrinsic value necessitates a revisit of the Howey test.
Highlighting the Ripple case as a prime example of the SEC’s departure from the rule of law, Deaton expressed his concern over its methodology and motives.
Read Also: Ethereum’s Vitalik Buterin: XRP is Listed As Crypto Despite Being Completely Centralized
SEC Has Lost Complete Sight of Its Mission
Deaton’s recent criticism of the SEC’s stance on XRP came shortly after Australian lawyer Bill Morgan questioned the agency’s argument regarding the digital asset’s intrinsic value.
The @SECGov, like many federal agencies, has lost complete sight of its mission and purpose. It literally ignores the law. Digital assets and the Ripple XRP case are the perfect examples.
Bill Hinman testified UNDER OATH that the SEC does not have to satisfy all Howey factors to… https://t.co/8sEDNiuaOy
— John E Deaton (@JohnEDeaton1) August 28, 2023
During the summary judgment phase of the Ripple case, the SEC claimed that XRP lacked intrinsic value, a claim recycled in its motion for leave to file an amicus curiae brief.
Responding to this assertion, Attorney Deaton called on the SEC to revisit the Howey test, a longstanding benchmark in assessing the security status of assets in the United States. Quoting a key passage from this legal yardstick, Deaton emphasized its significance:
“The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others. If that test be satisfied, it is immaterial whether the enterprise is speculative or non-speculative or whether there is a sale of property with or without intrinsic value.”
Read Also: Vitalik Buterin Reveals Reason For Resenting Ripple and XRP, David Schwartz, John Deaton Respond
Hinman’s Testimony Under Scrutiny
Additionally, Deaton highlighted the deposition of former SEC director Bill Hinman during the Ripple case. According to Deaton, Hinman testified under oath that the SEC does not need to fulfill all aspects of the Howey test to establish a sale as an investment contract.
Interestingly, Deaton presented two plausible explanations for Hinman’s remarks. Firstly, he suggested that Hinman’s incompetence and lack of qualifications while leading the SEC’s Corporation of Finance division might have influenced his testimony.
Secondly, Deaton raised the possibility that Hinman perjured himself. Based on his extensive experience, Deaton found it improbable for someone as accomplished as Hinman, who orchestrated the Alibaba IPO in 2014, to claim the SEC can disregard certain Howey factors in proving the nature of an investment contract.
The @SECGov, like many federal agencies, has lost complete sight of its mission and purpose. It literally ignores the law. Digital assets and the Ripple XRP case are the perfect examples.
Bill Hinman testified UNDER OATH that the SEC does not have to satisfy all Howey factors to… https://t.co/8sEDNiuaOy
— John E Deaton (@JohnEDeaton1) August 28, 2023
Read Also: Top Lawyer Accuses Hinman of Being Paid to Attack XRP in Favor of Ethereum (ETH)
To strengthen his argument, Deaton pointed to a section of Hinman’s deposition where the former SEC director denied discussing the substance of his momentous June 14, 2018 speech.
Contrary to his statement, drafts of the speech revealed Hinman met with Vitalik Buterin, co-founder of Ethereum, a week prior to delivering the address. This revelation has fueled speculation of potential external influences on Hinman’s determination that ETH should not be considered a security.
A Call for Reassessment
As the legal battle between Ripple and the SEC rages on, attorney John Deaton’s plea for the SEC to revisit the Howey test stands as a thought-provoking challenge.
Deaton’s assertions shed light on potential discrepancies within the regulatory body and the importance of upholding the rule of law.
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