John E Deaton, Founder of Crypto-Law.us, recently took to Twitter to express his opinion on the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC). He criticized the SEC’s “schizophrenic theory” on what constitutes a common enterprise in the case.
Deaton’s tweet came in response to a tweet from Stuart Alderoty, Chief Legal Officer at Ripple, who commented on the Revak case and stated that the SEC’s “sleight of hand” was once again exposed.
Alderoty argued that without a common enterprise, it doesn’t matter whether investors’ fortunes are tied to the efforts of others.
Deaton, in his tweet, pointed out that the SEC had shifted its theory multiple times during the case. First, the SEC claimed that Ripple was a common enterprise. However, Ripple’s argument that XRP holders receive no interest in Ripple whatsoever led the SEC to abandon this theory.
Next, the SEC argued that the entire XRP ecosystem, including all XRP holders, exchanges, and vendors that accept XRP as a form of payment, constituted the common enterprise.
In order to support this claim, the SEC hired an expert witness who testified that all XRP holders must rely on Ripple. However, XRP holders were able to exclude this expert’s opinion.
Finally, the SEC abandoned the XRP ecosystem theory and claimed that XRP itself represents the common enterprise. Deaton referred to this argument as the “schizophrenic defense.”
The legal battle between Ripple and the SEC has been ongoing for two years. The SEC has accused Ripple of conducting an unregistered securities offering worth $1.3 billion through the sale of XRP. The company, on the other hand, has argued that XRP is not a security.
The outcome of the case is likely to have significant implications for the cryptocurrency industry, particularly regarding the regulatory treatment of cryptocurrencies by the SEC. As the case continues, how the court will rule on the matter remains to be seen.
Ripple’s XRP Community Response
Nevertheless, the tweet sparked reactions from the crypto community. Some saw it as the SEC’s evil plan to crush the industry, while others questioned the lead prosecutor’s motives.
However, some were confident that the truth would come out and that the industry could not be suppressed forever. The comments reflect the uncertainty in the industry, and it remains to be seen how the case will affect the future of cryptocurrencies.
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