Attorney Deaton asserts that the SEC’s case against Ripple was an attack on the entire crypto industry.
In a tweet today, prominent cryptocurrency advocate and lawyer John E. Deaton noted that the United States Securities and Exchange Commission’s case against Ripple has always been a major threat and danger to all of crypto.
Deaton noted that people need to read the SEC’s complaint literally and ignore the intentional noise to spot these threats.
The pro-crypto lawyer explained that after the SEC filed its charges against Ripple, he spent a year convincing crypto enthusiasts that the agency was implicating XRP secondary market transactions as securities in the case.
However, over a dozen people argued with Deaton that the regulator was only alleging securities related to Ripple’s XRP sales. Others, including SEC’s lawyers, argued that his concerns were overblown.
According to Deaton, some SEC lawyers told him the agency would apply Section 4 exemption to XRP secondary market transactions.
He explained that Section 4 of the Securities Act shifts the burden of exemption to the token holder. Deaton further shed light on Section 4 to show that the exemption clause does not apply to secondary transactions.
Plus, under the statute, an “underwriter” is: “any person who has purchased from an issuer with a view to … the distribution of any security.”
This could mean that anyone w/an intent to sell/distribute #XRP is barred from doing so. Thus, a Section 4 exemption doesn’t apply!
— John E Deaton (@JohnEDeaton1) May 15, 2023
Aside from convincing people that the SEC’s complaint was implicating secondary market transactions, Deaton filed an amicus brief in the case on behalf of thousands of XRP investors to protect their interests.
Chamber of Digital Commerce Founder Speaks on SEC vs. Ripple Case
Deaton remarked Perianne Boring, the founder and CEO of the crypto advocacy group Chamber of Digital Commerce, described the ongoing lawsuit as a “precedent-setting case.”
In a video making the rounds on Twitter, Boring said the outcome of the SEC vs. Ripple case would have an impact on other crypto-related companies and other firms in the capital market.
She clarified that the Howey test, which the SEC uses to evaluate whether a transaction constitutes a security, only applies to the initial issuance of an asset and not its secondary market transactions.
“In the 80-year history of Howey, it has never been applied to secondary market transactions,” Boring said.
It is worth noting that the Chamber of Digital Commerce also joined other entities to file amici curiae (friends of the court) briefs in the SEC vs. Ripple lawsuit.
The advocacy group’s interest in the case was focused on whether the law applicable to securities transactions is properly distinguished from that of secondary transactions.
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