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SEC v. Ripple: This Is SEC's Strongest Argument About XRP, Says Crypto Lawyer

Wed, 01/11/2023 - 08:14
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Gamza Khanzadaev
SEC has this argument against Ripple and XRP, says lawyer, but here's the catch
SEC v. Ripple: This Is SEC's Strongest Argument About XRP, Says Crypto Lawyer
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John Deaton, a well-known lawyer and pro-crypto activist in the XRP community, offered a counterpoint to a paragraph in a document in the SEC's lawsuit against Ripple. The claim is that since the crypto company relies on XRP sales to support its operations and capital expenditures, it demonstrates common interest with cryptocurrency holders and gives them the impression that the price of XRP will go up as a result of Ripple's efforts.

The SEC claims this information as proof that Ripple and XRP are a common enterprise and that the cryptocurrency is a security. The argument is further supported by the fact that Ripple offered crypto exchanges compensation for listing XRP, which according to the Howey test used by the regulator to determine security status, also makes them a common enterprise.

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According to John Deaton, both facts are indisputably the strongest arguments available to the Securities and Exchange Commission. Nevertheless, the lawyer wants to know, what is common enterprise? If a judge were to accept the argument that Ripple stimulated exchanges and wanted to sell XRP and create a secondary market, she would need to recognize that the entire XRP ecosystem, including the exchanges and all the holders, is a common enterprise, Deaton says.

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At the same time, indeed, yes, concludes the lawyer: if the court is willing to accept the fact that the entire XRP ecosystem is a common enterprise, it has all the argument in favor of it.

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About the author

Financial analyst, trader and crypto enthusiast.

Gamza graduated with a degree in finance and credit with a specialization in securities and financial derivatives. He then also completed a master's program in banking and asset management.

He wants to have a hand in covering economic and fintech topics, as well as educate more people about cryptocurrencies and blockchain.