Questions Raised About An Unreleased Memo Regarding XRP Non-Security Status

Attorney Deaton raises a pertinent question about a 2018 XRP memo from SEC enforcement lawyers.

Prominent crypto advocate and lawyer John Deaton has taken to X to comment on a 2018 memo regarding the non-security status of XRP.

For context, the memo came from SEC’s enforcement lawyers who tried to understand whether XRP was a security in 2018. Although the details of the memo have not been released, Judge Sarah Netburn disclosed that the SEC’s legal experts did not recommend any actions against Ripple Labs.

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The lack of recommendation by SEC’s lawyers suggests that as of June 13, 2018, the memo did not conclude that XRP was a security.

Deaton Clears a Misconception

Notably, the memo came up during a discussion over the weekend. According to an XRP enthusiast, Attorney Deaton claimed the memo did not conclude that XRP satisfied the prongs of Howey. Reacting, Deaton clarified that he never made such a comment.

“To be clear, I didn’t say the memo concluded XRP is not a security,” said Deaton.

To be clear, I didn’t say the memo concluded XRP is not a security. The memo was found to be privileged and not disclosed so I haven’t read exactly what it says. But Judge Netburn found it important to note that the authors of the memo, who were Enforcement lawyers at the SEC,…

— John E Deaton (@JohnEDeaton1) August 27, 2023

The pro-XRP lawyer said he has not read the memo because it is still privileged. However, Judge Netburn revealed that the SEC’s enforcement lawyers did not recommend any action to be taken against Ripple, Deaton said.

“Thus, the memo did not conclude that XRP is clearly a security as of June 13, 2018, or there would’ve been a recommendation for enforcement or some action,” he added.

Deaton Raises Vital Question

Deaton pointed out that it is unlikely for the commission to conclude that XRP was a security in 2018 and still allow Ripple to continue violating the law via the coins’ sales.

Per Deaton, if SEC’s enforcement lawyers struggled to conclude that XRP was a security in 2018, how would Ripple execs have known they were being reckless in distributing as a security in 2013-2015?

Upcoming SEC v. Ripple Trial

Recall that the SEC charged Ripple execs- Brad Garlinghouse and Chris Larsen- with aiding and abetting the company in distributing XRP as a security.

Judge Analisa Torres scheduled the case for a trial by Q2 2024. The SEC and Ripple have already submitted their respective blackout dates for the upcoming trial.