Deaton Says XRP Transactions Aren’t Securities Even If Court Certifies SEC Appeal Request

Attorney John Deaton says even if Judge Torres certifies the SEC’s appeal request and stays the Ripple lawsuit, XRP transactions cannot be deemed as securities.   

Prominent crypto lawyer John Deaton has continued to clarify issues bordering on the non-securities status of XRP. In a recent tweet, the vocal attorney highlighted a misconception about the fate of XRP transactions if the court grants the SEC’s interlocutory appeal request. 

A news outlet noted that if Judge Analisa Torres approves the SEC’s appeal request, “most XRP transactions might still be securities transactions.” 

Deaton Reacts 

Reacting, Attorney Deaton noted that it is a false claim, adding that it constitutes total FUD (Fear, Uncertainty, & Doubt).

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According to Attorney Deaton, even though Judge Torres decides to certify the SEC’s interlocutory appeal and stay the Ripple lawsuit, it would not imply that most XRP transactions are securities. 

“That would assume just because the SEC claims it is, means it is. That’s not even close to being accurate,” he added. 

In this article it’s says:

“In short, most XRP transactions might still be securities transactions.”

This is NOT true and constitutes total FUD. Even if Judge Torres agrees to certify the interlocutory appeal and stay the case (HUGE ASSUMPTIONS, especially the stay), it would… https://t.co/o7VLWbszUo pic.twitter.com/5T0H57UC8A

— John E Deaton (@JohnEDeaton1) August 11, 2023

SEC Claim Is Not the Law

Furthermore, Attorney Deaton shared a document showing the SEC admitting that Judge Torres was the exclusive forum to test the validity of its claims. 

The pro-XRP lawyer added that the judge tested the SEC’s theory under Howey and rejected it. Deaton asserted that whatever the SEC claims is a security is not the law.  

SEC Requests Interlocutory Appeal 

It is worth noting that the SEC has been signaling plans to appeal Judge Torres’ ruling on Ripple’s sales of XRP to retail investors. Last week, the regulator took an official step by requesting permission to file an interlocutory appeal. 

Notably, the SEC’s appeal will focus on Ripple’s programmatic sales of XRP on secondary markets and other distributions, as the judge ruled that both transactions do not constitute securities. 

According to the SEC, the decision on Ripple’s XRP programmatic sales poses “controlling questions of law on which there is substantial ground for differences of opinion,” as reflected by Judge Jed Rakoff in the SEC v. Terra case. 

It can be recalled that Judge Rakoff rejected Judge Torres’ distinction between institutional and retail buyers of XRP. Per Judge Rakoff, the Howey test does not distinguish between the types of buyers that Judge Torres drew in her ruling. 

Pro-XRP Lawyer Says Judge Torres Didn’t Err 

Judge Rakoff’s remark has put the Ripple ruling into question, with many suggesting that Judge Torres erred. However, pro-XRP lawyer Bill Morgan shared a document showing that the SEC was responsible for distinguishing Ripple’s XRP sales into three categories: programmatic sales, institutional sales, and other distribution. 

Per Morgan, Judge Torres followed the SEC’s categorization of Ripple’s sales and applied the Howey test to them. Reacting, Deaton said he is willing to bet significant funds that the Second Circuit would not reverse Judge Torres’ decision.