Ripple News: Pro-XRP Lawyer Explains How the SEC is Taking a ‘Shorthand’ Approach in the Case

Pro-XRP lawyer John Deaton took to Twitter handle and explained via a long thread how it has been 76 years since an investment contract case was decided, where the underlying asset was deemed to be a security. This implies that there has not been a precedent-setting case in this regard for a considerable amount of time.

The lawyer said that many individuals, including Gary Gensler, have expressed their views on digital asset investment, claiming that investors’ speculation of price increases is indicative of an investment contract. However, this notion is baseless, according to him. The Howey test, which was established by the Supreme Court, explicitly stated that an investment contract is not solely defined by an expectation of profits from a third party’s efforts.

Citing the LBRY case, Deaton said that LBRY had sold #LBC to Flipside Crypto, which is a cryptocurrency investment club that had placed the LBC in cold storage. The judge presiding over the case had determined that this direct sale constituted the sale of an investment contract. However, the judge made it clear that this ruling does not apply in the event that Flipside Crypto decides to sell the LBC at a later time.

“Yet, the SEC, a failed and broken agency, refused to publicly declare what they were conceding in open Court. This broken agency refused to offer no-action letters to #LBC users/holders – just like it refused to give no-action letters to #VERI token holders,” he wrote.

Talking about the SEC, he spoke about an employee at the regulatory body and said that in a public statement, Hester Peirce has revealed that her colleagues in the SEC tend to concentrate on the token itself rather than the circumstances surrounding its offer and sale.

According to Hester, these enforcement lawyers and commissioners utilize a “shorthand” approach, focusing on the token as a whole instead of considering the broader context in which it was offered and sold.