XRP’s Regulatory Purgatory: Inside Scoop on Ripple vs. SEC Tug-of-War

• Legal expert John E. Deaton sheds light on the XRP Howey Memo’s implications from June 2018.
• Ripple’s execs sought clarity on XRP’s status, contrasting it with BTC and ETH’s defined positions.

Deep Dive into the Ripple vs. SEC Labyrinth

Recent updates in the protracted legal tussle between the US Securities and Exchange Commission (SEC) and Ripple shed more light on the crypto regulatory landscape’s complexities. As both parties align their diaries for a decisive face-off set for Q2 2024, deeper layers of the narrative are unveiled.

Deciphering the Howey Memo’s Implications

John E. Deaton, a prominent legal mind and staunch Ripple advocate, took the crypto community on a journey into the historical intricacies of the case. A focal point of his exploration was the SEC’s XRP Howey Memo from June 13, 2018. This memorandum was grounded in the foundational Howey Test – a paramount legal touchstone that ascertains if a transaction is characterized as a security under US federal law.

In a surprising twist, the memo came to light a day preceding Bill Hinman’s address, where the then SEC official distinguished Bitcoin (BTC) and Ethereum (ETH) as non-securities. However, Deaton highlighted a crucial nuance: the Howey Memo never hinted at any punitive measures against XRP. No call to terminate XRP sales, no directive to Ripple or its helm – Brad Garlinghouse and Chris Larsen – to cease and desist. Deaton’s tweet elucidated,

“Guess what the XRP Howey Memo did NOT recommend in June 2018?”

However, the story doesn’t end there. Probing further, Deaton unveiled that post-memo, Garlinghouse and Ripple’s CTO, David Schwartz, convened with ex-SEC chair Jay Clayton. In this discourse, Garlinghouse reportedly voiced Ripple’s anguish, pointing to the ‘regulatory purgatory’ they found themselves in, especially when benchmarked against BTC and ETH’s clear regulatory pathways.

The narrative grew even murkier. Despite Ripple’s quest for clarity, neither Clayton nor Hinman unequivocally stated XRP’s status as a security. Deaton’s concluding remarks resonate with the perplexity many in the crypto community feel,

“It kind of makes you wonder why they filed the case as they were leaving the SEC forever, doesn’t it?”

While legal theories swirl, XRP’s market sentiment reflects a bearish undertone. Trading at $0.51, it’s down by 2.6% over the day, witnessing a weekly drop of 1% and a more substantial monthly dip of 27%.

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