John Deaton, the managing partner of the Deaton law firm, uncovered a major secret in the Ripple-SEC battle. According to him, Hester Peirce, the SEC Commissioner, claimed her colleagues did not properly conduct the Howey Test.
Deaton tweeted that Peirce acknowledged that the SEC did not examine each XRP transaction individually. Deaton also stated that XRP satisfies two Howey Test elements – “expectation of profits” and “common enterprise.”
Does The SEC Need To Redo The Howey Test?
Peirce criticized the SEC’s analysis, stating that it was flawed. According to her, SEC only considered the token itself instead of the context surrounding its offering and sales, such as the transaction, agreement, or scheme.
“@HesterPeirce acknowledged that her colleagues at the @SECGov use a simplified analysis approach, concentrating on the token rather than the context of its offering and sale,” Deaton tweeted.
Peirce argued that there should be a greater focus on the context surrounding how Ripple offered and sold the XRP token. She acknowledged that the regulator could examine any individual or entity promoting the direct sale of any asset or commodity, including tokens.
Deaton believes Judge Torres will rule against the motion of the securities regulator for a summary judgment. This is because SEC was not honest while using the Howey Test to evaluate the performance of the XRP token.
The SEC and Ripple are currently engaged in a legal dispute that has been ongoing for over two years. The verdict of the case could significantly impact the overall evaluation of the crypto market.
Ripple-SEC Verdict To Affect XRP’s Price
Many individuals in the crypto space are closely monitoring the price of XRP. Many analysts have persisted that the case will have a massive bearing on the native token.
Furthermore, the crypto community recorded a significant victory recently against the SEC. The regulator had sued a blockchain company LBRY accusing it of selling securities tokens.
Fortunately, the court ruled recently in favor of LBRY and noted that it does not consider the LBC token a security. After the court announced its decision on the SEC vs. LBRY case, the company’s share value rose significantly.
Hence, the crypto ecosystem is optimistic that a similar situation would play out with the SEC vs. Ripple battle. In a recent article, IG Bank, a Swiss-regulated financial institution, argued that the outcome of the Ripple case would affect the classification of digital currencies.
According to the report, the SEC winning the case would throw the entire crypto industry into chaos. In addition, it would set Ripple’s XRP as a precedent for future securities-related cases.
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