This week, the United States Securities and Exchange Commission (SEC) filed lawsuits against the two biggest crypto exchanges, Binance and Coinbase.
XRP holder attorney and crypto enthusiast John Deaton, in his usual manner, reacted to the news while sharing his take as the events unfolded.
In a new tweet, Deaton, while speaking on the peculiarities of the Binance and Coinbase cases, spoke about the XRP holders' amicus brief filed in the Ripple lawsuit.
The CryptoLaw founder added that in the amicus brief on behalf of 75,000 XRP holders in the Ripple case, no sides were taken with Ripple. He explains that the brief took no position as to whether Ripple violated securities laws when it sold XRP.
The position taken in the brief, according to Deaton, was that XRP, like BTC and ETH, is digital code; the token itself is not a security; and, even if Ripple violated the law, secondary market sales do not.
The line about secondary market sales caught the attention of Dogecoin fan and billionaire Mark Cuban, who suggested a simple test for deeming the secondary market sales of a token to be securities.
The test for a 2ndary sale of a token as a security should be very simple : "Will the token survive if the minting/mining organization fails to exist?" That, by definition, ends the howey test application.— Mark Cuban (@mcuban) June 9, 2023
Cuban says the pertinent question that should be asked in such a test is: "Will the token survive if the minting or mining organization fails to exist?" He adds that, by definition, this ends the Howey test application.
CryptoLaw founder John Deaton agreed with billionaire Mark Cuban's perspective. He defines the more commonly used name of the test as the "Bahamas Test."
Deaton explains the details of the test as follows: "If the token were to pick up and move to the Bahamas, never to be heard from again, or do anything further with the project, would the token survive? If it would, not security."
In related news, Binance.US has announced it will be suspending USD deposits, notifying customers that its banking partners are preparing to pause fiat (USD) withdrawal channels as early as June 13.