Crypto Enthusiast Says Jay Clayton Wasn’t Interested in Giving Ripple Clarity About XRP, Deaton Reacts

An XRP community member shares a new document regarding the SEC vs. Ripple lawsuit.   

XRP enthusiasts have continued to comment on some of the documents released yesterday regarding the ongoing lawsuit between the SEC and Ripple. 

In a tweet yesterday, an XRP community member known as Ashley Prosper shared an internal SEC email labeled Exhibit 276 in the SEC vs. Ripple lawsuit. 

According to Prosper, the document proves that former SEC Chairman Jay Clayton was never interested in giving Ripple clarity regarding XRP. 

Meeting Between Ripple Execs & SEC Officials

According to the document, Ripple’s CEO Brad Garlinghouse and CTO David Schwartz met with top officials from the SEC, including Clayton and former director of SEC’s Corporation Finance William Hinman, on August 20, 2018. 

During the meeting, which lasted 50 minutes, Garlinghouse and Schwartz talked about Ripple’s business and technology while the SEC attendees interjected to ask certain questions. 

At the end of the meeting, Garlinghouse noted that Ripple was in “purgatory” due to the uncertainty as to whether XRP was a security. 

Responding to the remarks, Clayton stated that the meeting was not the proper forum for the topic. He urged Garlinghouse to “back up” from the issue and steer the meeting to a discussion about Ripple’s businesses. 

With Garlinghouse poised to know the legal status of XRP, Clayton ended the meeting while encouraging Ripple execs to continue talking with the Division of Corporation Finance staff. 

It bears mentioning that Garlinghouse requested clarity for XRP from SEC officials just two months after Hinman declared Ethereum (ETH) as non-security. 

Deaton Reacts 

Commenting on the recently-shared document, CryptoLaw founder John Deaton highlighted the importance of the August 20, 2018 meeting. 

Per Deaton, on June 13, 2018, Clayton and Hinman received an internal memo analyzing XRP under Howey, a legal test in the U.S. that determines whether a transaction constitutes a security. 

Deaton noted that if the memo had concluded that XRP was a security, Clayton and Hinman would have told Ripple execs so during the meeting. 

“[…] You would expect Hinman and Clayton to respond to @bgarlinghouse’s ‘purgatory’ comment with: ‘We didn’t give you clarity in the speech with ETH because XRP is a security. We had our people did a detailed analysis and that’s what they found,” said Deaton.

What’s important about this meeting on August 18, 2018 is that on June 13, 2108 Clayton and Hinman received an XRP Memo analyzing XRP under Howey. Had the 📝 concluded XRP was a security, you would expect Hinman and Clayton to respond to @bgarlinghouse’s “purgatory” comment with:… https://t.co/dc20k4Dpj3

— John E Deaton (@JohnEDeaton1) June 14, 2023

However, Clayton never called XRP a security when Ripple execs enquired. Instead, he told Ripple executives to continue communicating with staff at the Corporation Finance.