- John Deaton, the attorney for XRP token holders, questions the secrecy around a 2018 Howey memo from the SEC, arguing that its concealment is potentially damaging to the SEC.
- The Howey memo, pertaining to whether XRP sales can be classified as securities, is suspected to contain content favorable to Ripple and XRP.
The legal battle between XRP token holders and the U.S. Securities and Exchange Commission (SEC) has added another layer of complexity. John Deaton, the attorney representing XRP token holders, recently raised intriguing questions about a concealed document, known as the Howey memo. This document traces back to June 2018, when Ripple Labs CEO Brad Garlinghouse and CTO David Schwartz posed questions to William Hinman, the former director of the SEC’s Division of Corporation Finance.
Unraveling the Enigma of the Howey Memo
For those unfamiliar, the Howey Test is a legal framework used to determine whether a transaction qualifies as an “investment contract,” and thus falls under the purview of federal securities laws. The elusive Howey memo in question is suspected to carry information pivotal to whether XRP‘s token sales could be classified as securities.
Deaton’s qualms center on why this document remains hidden, particularly when the SEC has consistently argued that the sale of XRP tokens should be regulated as securities.
“If the Howey memo demonstrated XRP was a clear-cut case of a security, why isn’t it public?”
questions Deaton. He surmises that the memo could contain assessments that muddle the SEC’s stance. It could even possibly carry inferences that XRP does not fulfill the conditions to be classified as a security under the Howey Test, thereby turning the tables in Ripple‘s favor.
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Deaton also recalled Judge Analisa Torres’ previous acknowledgment that the XRP token sales did not fit the Howey Test criteria. The attorney suggests that bringing former SEC Chair Jay Clayton and William Hinman before the Court could prove beneficial for the XRP community.
Adding further nuance to his argument, Deaton states that the concealment of the Howey memo is a calculated move by the SEC. According to him, the agency would not hesitate to disclose the document if it unequivocally labeled XRP as a security, substantiating their case. The fact that they choose to keep it under wraps raises more than an eyebrow.
The intricacies of this case point to a larger issue in the blockchain and crypto sphere—regulatory clarity. For the time being, the withholding of this critical Howey memo adds another element of suspense to an already closely-watched case, making the unfolding events crucial not just for Ripple and XRP but for the entire crypto-industry.
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