John Deaton: Ripple Selling XRP as an Investment Contract Does Not Make XRP a Security

Renowned cryptocurrency lawyer and CryptoLaw founder, John Deaton, has recently explained the status of XRP regarding its classification as a security, given Ripple’s investment contract. According to Deaton, XRP is not a security, regardless of whether Ripple sold it as an investment contract to handpicked investors.

Deaton recently spoke out on the subject, revealing that thousands of investors purchased XRP without knowing anything about Ripple. According to his interactions with over 10,000 investors, 52% of them had no information about Ripple when they made their initial XRP buy.

Following Deaton’s remark, an XRP community member, Caesar Korvinus, inquired about his fate, given that he and other early investors were aware of Ripple before purchasing XRP in 2016. Deaton responded, claiming that if Ripple had direct communication with Korvinus and sold him XRP, the SEC may claim that the Howey test for security was met.

According to Deaton, the three possible arguments raised by the SEC from the scenario are Korvinus and other investors giving money to Ripple, entering into a common enterprise with Ripple via vertical commonality, and sitting back to profit from Ripple’s Board of Directors’ efforts. He stressed that the Howey test would not be met if the customer purchased XRP from Ripple for non-investment objectives.

Deaton has been outspoken in his defense of XRP against arguments that it should be categorized as a security. As amicus curiae counsel, he is representing thousands of XRP investors in the SEC vs. Ripple case.

Deaton has maintained that XRP secondary market transactions are not securities, and he expects Judge Analisa Torres to address this in her impending opinion. Ripple anticipates that the litigation will be concluded by the end of the year, although no official judgment date has been set.

Finally, Deaton asserts that even if Ripple marketed an investment contract with XRP as the underlying asset, this isn’t an affirmation that XRP is a security.

Read Also: Attorney John Deaton Looks Forward to XRP at $10 Price Once Ripple-SEC Lawsuit Ends

Ripple-SEC Legal Battle Continues as Deaton Affirms XRP is Not a Security

Deaton’s words have added much-needed clarity to the ongoing XRP discussion and Ripple’s legal struggle with the SEC. Ripple has always maintained that XRP is not a security and should not be regulated as such. The SEC, on the other hand, has accused Ripple of selling XRP as an unregistered security and has initiated a lawsuit against the company.

The XRP community is anticipating the summary judgment. Judge Torres’ final decision is expected to provide even more clarification on the security status of XRP, which might have a big impact on the cryptocurrency market.

---

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