The world of cryptocurrency is bursting with daily debates, and one of the hottest themes is whether XRP transactions should be classified as securities. Let’s look at some of the major arguments and critical aspects of this complex problem.
John Deaton, a prominent crypto lawyer, has been vociferous about the need to explain the validity of XRP. He recently clarified a misunderstanding that developed when the Securities and Exchange Commission (SEC) requested an appeal. Some speculated that if the appeal is allowed, the vast majority of XRP transactions would be categorized as securities transactions. Deaton, on the other hand, dismisses this as pure FUD, or Fear, Uncertainty, and Doubt.
Deaton goes on to say that just because the SEC says XRP transactions are securities doesn’t mean they are. He underlined that the law is not simply governed by the SEC’s claims. Even if the judge grants the appeal and stops the ripple case, this does not automatically make them securities.
Deaton, interestingly, shared a document that shows the SEC’s admission that Judge Analisa Torres is the one who would decide the validity of the claims. It is also worth noting that Judge Torres has already rejected the SEC’s theory under the Howey test. This is a critical legal foundation for determining whether an asset is a security.
The SEC and Ripple
The SEC’s appeal focuses on Ripple’s secondary market XRP sales and other distributions. As a result, the SEC contends that the decision on these sales includes significant legal issues on which there is substantial room for disagreement. This allegation is based on a similar Terra-related lawsuit.
However, pro-XRP lawyer Bill Morgan argued that the SEC had classified Ripple’s XRP sales as programmatic sales, institutional sales, and other distributions. The Howey test was simply applied to these categories by Judge Torres. Deaton is optimistic that the Second Circuit will not overrule Judge Torres’ judgment. This indicates that the legal dispute over the status of XRP is far from over.
Finally, the argument continues. The judicial proceedings and the views of the participating courts will ultimately determine whether XRP transactions are securities. The outcome of this case could have far-reaching consequences for the blockchain sector as a whole.