CryptoLaw founder John E. Deaton is making a stronger case as to why crypto tokens should not be labeled securities. The attorney for XRP holders was responding to a Twitter user who claimed that almost every coin or token was a security.
Deaton stated that this was not true and that the SEC's narrative that the token itself is a security should not be allowed to continue in the crypto industry.
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has repeatedly stated that most crypto tokens were securities.
Deaton explains that although a token could be packaged, marketed, offered and sold as a security, that does not make the underlying asset or token one. He says that the token itself is nothing more than software code.
He continued that the term "investment contract" or "security" was never about the underlying asset but about the circumstances surrounding its offer and sale.
Ripple victory in SEC lawsuit bigger win for crypto industry
Deaton cites three references to buttress his point. First, in the Telegram case, the ruling judge made it clear that the GRAM token was not a security as it is an "alphanumeric sequence."
He also quoted the famous speech of former SEC official Bill Hinman, who said that the "digital asset itself is simply code."
Third, he cited Lewis Cohen's article, which suggested that "no appellate court has ever held the underlying asset subject to an investment contract transaction is itself an investment contract and that there is no federal case finding a subsequent transfer of that asset to be a securities transaction."
Deaton added, "We shouldn't call software code securities either—even if previously sold as one." "We forced the SEC to admit in its opposition brief that 'stripped down XRP is computer code,'" he further stated.
In related news, several respondents to the question posed by Paul Barron's network Twitter account believe that a Ripple win against the SEC would be a bigger win for the crypto industry than a Grayscale Bitcoin ETF launch.