John Deaton, crypto lawyer and legal representative of XRP holders in the lawsuit between Ripple and the U.S. Securities and Exchange Commission (SEC), has slammed haters and critics of Judge Analisa Torres, insisting that her recent decision in the ongoing case is “very sound.”
In a lengthy Twitter thread, Deaton outlined why Judge Torres’ decision was the correct ruling, despite claims that it was inconsistent with policy considerations behind the 1934 Securities Act.
Deaton Slams Judge Torres’ Critics
Deaton explained that thousands of XRP holders acquired the crypto asset for non-investment purposes. He noted that a majority of first-time purchasers were unaware that the company called Ripple existed or that it owned half of all the XRP.
The lawyer insisted that most first-time buyers bought the asset because it was in the top three cryptocurrencies and cheap. Its transactions are settled within 3-5 seconds – compared to Bitcoin, which takes 10 minutes to an hour – and cost about a fraction of a cent to transfer $1m, unlike Ethereum.
Furthermore, Deaton stated that the SEC was so desperate that it asked Judge Torres to adopt a standard that the 2nd Circuit never had. He argued that the Commission failed to establish the common enterprise factor because it could not satisfy the third Howey factor.
The SEC Would Need More Than Luck
The crypto lawyer explained that horizontal commonality must exist for a common enterprise to be established. The horizontal commonality exists when investors’ assets are pooled, and the fortunes of each of them are tied to that of others as well as to the success of the overall enterprise.
According to the law, XRP holders are not in a common enterprise with each other or Ripple because some investors can choose to loan or stake their assets to benefit financially while others do not. Using the bankruptcy of crypto lender Celsius Network as an instance, Deaton explained that XRP holders who loaned the firm their assets suffered losses while Ripple and other investors did not.
After reviewing Judge Torres’ win in the appeals of previous summary judgment decisions, Deaton insisted the Ripple vs. SEC case was a “simple strict application” of factors in the Howey test. He asserted that the SEC would need more than luck to reverse the ruling.
“Nothing more, nothing less. Judge Torres did her job, and some people don’t like it. Too bad. The law won,” Deaton said.
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