Crypto lawyer and supporter John Deaton says he’s discovered potentially “damaging” information among the court documents in the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple.
Deaton his 266,600 Twitter followers that Ripple’s opposition cites an SEC email about there being reasonable grounds to not believe XRP satisfies all the factors of the Howey test.
The Howey test was created by the Supreme Court to determine if an asset is a security based on whether or not investors expect to earn profits derived from the efforts of others.
Says Deaton about the email,
“The SEC wanted all statements by SEC staff redacted and it appears they all were. What this tells me is that the statement about XRP not satisfying Howey is NOT a direct quote from a senior SEC official – otherwise it would be reacted.
I’ve concluded that that statement was made by a market participant independent of Ripple, not the SEC, but it was referenced by someone in the Hinman emails, or the 3rd party email was forwarded to Hinman or the email group discussing the speech.
I always want my comments to be based on facts, so I’m making this clarification. Although it isn’t a direct quote by an SEC official it is still damaging as hell because it demonstrates XRP was discussed. Someone at the SEC passed this XRP opinion to the email group for a reason.”
In 2020, the SEC sued Ripple Labs, the issuer of payment token XRP, alleging they illegally sold unregistered securities. The lawsuit is pending, but Ripple expects a summary judgment this year.
Last week, US District Judge Analisa Torres ordered that documents relating to the much-discussed “Hinman emails” be unsealed for public access.
The documents contain internal SEC deliberations about a delivered by former SEC official William Hinman in 2018 when he stated in his official capacity that he believed both Bitcoin () and Ethereum () are not securities.