Attorney John Deaton has asked the SEC to reread the Howey test following its claim that XRP has no intrinsic value.
Crypto-Law.US founder John Deaton has once again slammed the SEC for losing sight of its mission and purpose.
According to Attorney Deaton, the securities regulator ignores the law in its quest to achieve its desired goal. The pro-XRP lawyer cited the Ripple case as an instance where the SEC has ignored the law.
The @SECGov, like many federal agencies, has lost complete sight of its mission and purpose. It literally ignores the law. Digital assets and the Ripple XRP case are the perfect examples.
Bill Hinman testified UNDER OATH that the SEC does not have to satisfy all Howey factors to… https://t.co/8sEDNiuaOy
— John E Deaton (@JohnEDeaton1) August 28, 2023
Deaton Urges SEC to Reread Howey
Attorney Deaton’s comment came after Australian-based lawyer Bill Morgan criticized the SEC for arguing that XRP has no intrinsic value.
Morgan stated that the SEC had made this claim during the summary judgment stage of the Ripple case. He added that the regulator made the same argument in its motion for leave to file an amicus curiae brief.
Reacting, Attorney Deaton urged the SEC to read the Howey test- a longstanding securities test in the US- again. The pro-XRP lawyer quoted a portion of the test, which read:
“The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others. If that test be satisfied, it is immaterial whether the enterprise is speculative or non-speculative or whether there is a sale of property with or without intrinsic value.”
Maybe the SEC should read Howey again:
“The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others. If that test be satisfied, it is immaterial whether the enterprise is speculative or… pic.twitter.com/qr1yqyhLRo
— John E Deaton (@JohnEDeaton1) August 28, 2023
Did Hinman Lie Under Oath?
Furthermore, Deaton recounted the deposition of former SEC director Bill Hinman in the Ripple case. According to Deaton, Hinman testified under oath that the SEC does not have to satisfy all prongs of the Howey test to prove a sale qualifies as an investment contract.
Interestingly, Deaton highlighted two major reasons that could have prompted Hinman to make such comments. Firstly, Deaton said Hinman could have remarked because he was unqualified and incompetent to head the SEC’s Corporation of Finance division at the time.
Secondly, he noted that the former director of SEC’s Corporation Finance could have lied under oath. Meanwhile, Attorney Deaton believes Hinman lied under oath, as he seems too qualified to claim the SEC does not have to satisfy all Howey factors to prove a sale of an investment contract.
Deaton pointed out that Hinman led the Alibaba IPO in 2014. Thus, Hinman cannot be incompetent.
To buttress his argument, Deaton referenced a portion of Hinman’s deposition, where the former SEC director claimed he never discussed the substance of his infamous June 14, 2018 speech.
The @SECGov, like many federal agencies, has lost complete sight of its mission and purpose. It literally ignores the law. Digital assets and the Ripple XRP case are the perfect examples.
Bill Hinman testified UNDER OATH that the SEC does not have to satisfy all Howey factors to… https://t.co/8sEDNiuaOy
— John E Deaton (@JohnEDeaton1) August 28, 2023
However, the drafts of the speech showed that Hinman met with Ethereum’s co-founder Vitalik Buterin a week before the remark. Consequently, there have been speculations that Hinman was influenced to declare ETH as a non-security.
