Crypto attorney John Deaton has responded to a Twitter user’s skepticism about the Securities and Exchange Commission’s (SEC) Howey Test theory in the ongoing lawsuit against Ripple Labs. 

Top Lawyer Debates Howey Test Theory

Deaton, who represents XRP investors, stated that the SEC’s theory could be summarized as follows: 

“Defendants do not dispute that they offered and sold XRP in exchange for ‘money,’ which suffices to establish the ‘investment of money aspect of the Howey test. Defendants’ statements and efforts as to XRP…establish the other aspects of the Howey test as a matter of law.”

Deaton’s response came after Twitter user Bill “Belisarius2020” replied to his initial tweet with a question about how an ODL customer who holds XRP for seconds before exchanging it for fiat could be making an investment or expecting a profit. Bill further stated that if Deaton’s quote was the best summary of the SEC’s theory, then it must be wrong.

To this, Deaton replied that, at this point, the SEC might agree with Bill. He reminded the Twitter user that the SEC had made a big deal about the fact that Ripple did not have commercial use for XRP until October 2018 and that the token only took off in May 2020.

The SEC argues that even if a country adopts XRP as currency in the future, XRP will still be considered a security because of all of Ripple’s efforts up until that point.

Given his prominence in the cryptocurrency community and his involvement in the XRP case, Deaton’s statement is noteworthy. He has publicly declared his solidarity with XRP holders and submitted a request to intervene on their behalf in the pending litigation.

Crypto enthusiasts have been keeping an eye on the SEC’s action against Ripple Labs because of the potential significance it may have for the securities categorization of digital currencies. According to the SEC, Ripple and its management illegally raised $1.3 billion via the sale of XRP coins.