John Deaton Applauds Judge’s Decision in Ripple vs. SEC Appeal

John Deaton, the proprietor of the Deaton Law Firm, weighed in on a recent decision by Judge Analisa Torres in the ongoing Ripple vs. SEC lawsuit.

As reported, Judge Torres’ judgment on Tuesday denied the SEC’s request to appeal a previous ruling.

In July, the court ruled that anonymous bid-ask transactions involving XRP tokens on crypto exchanges did not constitute securities transactions. However, the SEC attempted to appeal the decision, an effort that the court has now denied.

The SEC can only appeal the decision after a trial on pending issues, according to the most recent court ruling.

John Deaton, a pro-cryptocurrency attorney, applauded the court’s straightforward response to a number of the issues raised by the SEC in its appeal.

In a recent comment on the verdict, John Deaton remarked that Judge Analisa Torres essentially schooled SEC Chair Gary Gensler on the “Howey Test,” the guiding principle behind the SEC’s lawsuit against Ripple.

The judge gave the example of a typical user who visits a cryptocurrency exchange and discovers that the price of XRP has increased dramatically.

The judge argues that a user may decide to purchase XRP based on the recent price increase and have an expectation of profit, even if they are unaware of the existence of Ripple.

According to the judge, such a purchase, although motivated by an expectation of profit, was not derived from the “entrepreneurial or managerial endeavors of others,” as the Howey Test requires.

The Howey Test, on the other hand, necessitates that a person be aware that the profit on their investment would result from the effort of the underlying company in which the individual invests.

The judge ruled this was not the case for secondary XRP transactions and denied the SEC’s appeal.

The Ripple v. SEC case will proceed to trial in light of the most recent ruling. On April 23, 2024, the court will decide on the remaining issues raised by the SEC in its earlier litigation against Ripple.