Lawyer Clarifies the Flaws in SEC’s Claim that XRP Is a Security
- John Deaton explains the weaknesses of the SEC’s claim that was a security.
- The lawyer presented a 2019 provision that says crypto is not a security if used for payments.
- Previously, the SEC chairman said PoS blockchains tokens are security.
In a series of tweets today, famous blockchain lawyer John Deaton explains the shortcomings in the US Securities and Exchange Commission’s (SEC) claim that Ripple’s native blockchain token, XRP, constituted a security contract.
Deaton first quoted a 2018 provision of the US corporate finance regulation. The rule says:
The digital asset itself is simply code. But the way it is sold as part of an investment to non-users by promoters to develop the enterprise can be, in that context, a security.
Deaton said that since an asset can only be regarded as a security if promoters sold it as part of an investment to non-users, such a description does not match the case of Ripple’s token.
The lawyer further argued that thousands of XRP holders acquired the token to establish a TrustLine with the XRP ledger to transfer value and receive salaries through BitPay and other vendors. He added that many utilize XRP as a substitute for fiat c …
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