As the courtroom battle between Ripple and the United States Securities and Exchange Commission (SEC) continues to grab the attention of the crypto community, as well as the world, a legal expert and amicus curiae for the blockchain company, John E. Deaton, shared an explanation of one of the most important legal terms referring to the case, as well as his views on the ruling deadline.
Indeed, Deaton offered a detailed interpretation of securities and the ‘investment contract,’ which he called “one of the most misunderstood legal terms in the law,” and the Howey Test, “the most misapplied legal test or doctrine on social media,” as well as their connection to the current legal standoff as he stated in a Twitter thread published on April 2.
On securities and investment contracts
As he explained, sharing the definition of ‘security’ from the 1933 Securities Act, a “digital asset is not listed” and “software code is not listed,” also referring to the cases of the now-abandoned Telegram’s token GRAM, Kik Interactive’s token, as well as the decentralized video-sharing platform LBRY’s offerings of LBC to drive his point home.
Furthermore, he said:
“And the Supreme Court in the Howey case in 1946 defined what constitutes an investment contract. A digital asset or cryptocurrency (software code), STANDING ALONE, is NOT a security. It can be marketed, packaged, offered and/or sold as an investment contract aka a security.”
As he added, “when dealing with an investment contract, there hasn’t been a single case in U.S. history where the secondary sale of that asset was also found to be a security. NEVER.”
“Every Altcoin arguably starts out as a security when it’s first distributed, ICO or not. When Satoshi was the only miner of Bitcoin (or one of a few) and had he offered 100K BTC for sale for $100K USD, it would have been an unregistered securities offering.”
Court ruling deadline
Earlier, discussing the possibility that Judge Analisa Torres would make a summary judgment ruling soon, Deaton said that the deadline for her decision could range from hours to months and that, based on her earlier cases, two months following the Daubert/experts’ decision could be the waiting time, as he said in a tweet on March 31.
“There is no deadline of today for her to rule. The decision could come out within the next hour, or it could take another 30-60 days. Based on previous cases, Judge Torres has issued her ruling on summary judgment within a couple of months of her Daubert/Experts’ decision.”
Considering that, as Finbold earlier reported, the Judge issued her ruling on both parties’ Daubert motions to preclude expert witnesses’ testimony on March 6, 2023, this means that the crypto sector could wait at least another month for the Ripple v. SEC lawsuit to end.
‘Ripple’ effect of the case
As a reminder, pro-Ripple lawyers have voiced their opinion that the above decision could prove disastrous for the finance watchdog’s summary judgment motion, singling out the exclusion of one specific witness, who was supposed to testify on why people bought the XRP token, as ‘fatal’ to the SEC.
Meanwhile, the outcome of the case is predicted to have a major impact on the price of XRP. The token recently displayed the opposite response to TV personality Jim Cramer seeming to voice a belief that the Securities and Exchange Commission would lose the lawsuit after all.
As things stand, XRP is currently changing hands at the price of $0.52, recording an increase of 0.28% on the day, as well as gaining 1515% over the previous week, adding up to the 36.69% advance on its monthly chart, as per data retrieved on April 3.