In a tweet shared today, John E. Deaton, a popular advocate and lawyer in the cryptocurrency industry, pointed out that the lawsuit brought by the United States Securities and Exchange Commission (SEC) against Ripple has been a significant threat and risk to the entire crypto community.
Deaton emphasized the importance of carefully reading and analyzing the SEC’s complaint without being swayed by intentional distractions in order to identify these potential threats.
According to the pro-crypto lawyer, after the SEC filed charges against Ripple, he spent a year persuading individuals in the crypto community that the agency was alleging XRP secondary market transactions as securities in the case. He explained that it took significant effort to convince crypto enthusiasts of this fact.
Despite John E. Deaton’s assertions, more than a dozen individuals engaged in arguments with him, contending that the regulator’s allegations were limited to securities associated with Ripple’s XRP sales. Furthermore, even the SEC’s lawyers and other individuals argued that Deaton’s concerns were exaggerated or unwarranted.
John E. Deaton asserted that certain SEC lawyers informed him that the agency intended to apply the Section 4 exemption to XRP secondary market transactions.
He provided an explanation regarding Section 4 of the Securities Act, highlighting that this section places the burden of exemption on the holder of the token. He further clarified that Section 4 does not encompass secondary transactions, emphasizing that the exemption clause is not applicable in such cases.
In addition to persuading people about the SEC’s allegations regarding secondary market transactions, John E. Deaton also filed an amicus brief in the case on behalf of several thousand XRP investors, aiming to safeguard their interests.
Related article: Bitboy Advises Caution in Crypto Investing: How Many XRP Does it Take to Be a Millionaire?
Perianne Boring Speaks on SEC vs. Ripple Case
According to Deaton, Perianne Boring, the founder and CEO of the Chamber of Digital Commerce, referred to the ongoing lawsuit as a case that would establish a significant precedent within the industry.
In a widely circulated video on Twitter, Perianne Boring emphasized that the final result of the SEC vs. Ripple case would not only influence Ripple but also have broader implications for other cryptocurrency-related companies as well as firms operating in the capital market.
Boring clarified that the Howey test, employed by the SEC to determine whether a transaction qualifies as a security, is specifically applicable to the initial issuance of an asset and does not extend to secondary market transactions.
“In the 80-year history of Howey, it has never been applied to secondary market transactions,” Boring said.
It is important to highlight that the Chamber of Digital Commerce, along with other entities, participated in the filing of amici curiae (friends of the court) briefs in the SEC vs. Ripple lawsuit.
The primary concern of the advocacy group in relation to the case was centered around ensuring a clear distinction between the legal framework governing securities transactions and that which pertains to secondary transactions.
Related also: Ripple’s Chief Legal Officer Weighs In on the SEC’s Attempt to Establish XRP as a Security