Pro-XRP lawyer John Deaton said a vague footnote in Ripple's opposition briefing in 2022 could play a role in the ongoing fight between the US Securities and Exchange Commission (SEC) and Ripple.
Deaton explained on Twitter on May 22 that a brief footnote in a Ripple legal document he recently noticed confirms that XRP, In fact, "the SEC staff discussed it before Hinman spoke."
That could be significant, as an internal debate among SEC officials over whether XRP is a security could magnify the size of the ongoing lawsuit between the US regulator and Ripple. The SEC initially took legal action against Ripple in December 2020, all eging that sales of its XRP token represented an unregistered securities offering.
Ripple has denied that XRP is a security, arguing that it does not satisfy the Howey test, which is used to assess whether a transaction qualifies as a security. A footnote that Deaton believes to be from a third party other than the SEC states: " There are reasonable grounds to conclude that XRP does not satisfy all elements of Howey's analysis and is therefore not a 'security' for purposes of the federal securities laws."
In a May 22 Twitter Spaces session hosted by Fox Business reporter Eleanor Terrett, Deaton argued that this "clearly shows" that XRP was being discussed because "someone from the SEC quoted the person as saying it wasn't a security, or they were in an email chain. forwarded email in" "I'm 95% confident, statement, reasonable cause, etc., that it's not an SEC officer ... This is still big news, and in these litigation emails, it proves what we all think."
While Deaton noted that the SEC "has not commented on the record" if XRP had been discussed internally, he did reiterate that back in June 2018, XRP was the third-largest crypto asset after Bitcoin and Ethereum.
In a speech by former SEC Director William Hinman, who stated that Bitcoin and Ethereum are not securities, and “it appears that some in the SEC may think that XRP should be treated the same as Bitcoin and Ethereum,” Deaton explain. “It is argued that market participants do not believe that XRP is a security,” he said, adding: “XRP holders have been shouting and screaming for the past few years, which absolutely confirms that XRP has been talked about.”
In comments to Cointelegraph, Deaton pointed out that the apparent giveaway is its reference “SEC-LIT,” while other referenced emails are referenced as “SEC-PROD.” He further explained that the documents are "Hinman emails and speeches" that the SEC objected to producing, but still subject to litigation. “This tells me that the statement that XRP does not please Howey is not a direct quote from a senior SEC official – otherwise it would have been redacted,” he tweeted. Deaton said the community should keep an eye on June 13, when "we'll see" how much this affects the case, when the Hinman material could be unsealed.
