Ripple vs. SEC Lawsuit Update: Top Crypto Lawyer Says SEC’s Appeal Shows Agency is Unstable

The Securities and Exchange Commission (SEC) has come under fire from cryptocurrency experts and industry leaders for its handling of digital assets.

The criticism comes amid a number of high-profile cases involving the SEC, including its lawsuit against Ripple Labs, the creators of the cryptocurrency XRP. The SEC alleges that XRP is a security and that Ripple Labs violated securities laws by selling it without registering with the agency.

The case has raised questions about the SEC’s understanding of cryptocurrency and its willingness to regulate the industry.

John Deaton Slams the SEC

John Deaton, a lawyer who specializes in cryptocurrency law, is one of the SEC’s most vocal critics. He has accused the agency of “misinterpreting” the Howey Test, a legal standard that is used to determine whether an investment is a security.

The @SECGov, like many federal agencies, has lost complete sight of its mission and purpose. It literally ignores the law. Digital assets and the Ripple XRP case are the perfect examples.

Bill Hinman testified UNDER OATH that the SEC does not have to satisfy all Howey factors to…

— John E Deaton (@JohnEDeaton1) August 28, 2023

The Howey Test says that an investment is a security if it meets certain criteria, including the following:

  • It is an investment of money.
  • The investor expects profits to come from the efforts of others.
  • There is a common enterprise.
  • The investor’s profits are derived from the investment itself, rather than from the efforts of the investor.

Deaton argues that the SEC is ignoring the Howey Test when it comes to cryptocurrency. He says that the SEC is trying to regulate cryptocurrencies as securities even though they do not meet all of the Howey Test criteria.

Read More: Ripple CEO Announces ‘Victory Party’ in New York Post SEC Win; XRP Price Jumps!

SEC Defends Itself

The SEC has defended its actions, saying that it is simply trying to protect investors from fraud. But the criticism from Deaton and other experts has raised questions about the SEC’s competence and its commitment to fair regulation.

The SEC’s handling of cryptocurrency regulation is a complex issue with no easy answers. But the recent criticism suggests that the agency needs to do a better job of explaining its decisions and listening to the concerns of the cryptocurrency community.

The Ripple Effect

The SEC’s lawsuit against Ripple Labs has had a ripple effect throughout the cryptocurrency industry. Many investors are now worried that the SEC could target other cryptocurrencies as well.

The SEC’s decision to challenge Judge Torres’ ruling on XRP is also a worrying sign. It suggests that the agency is not willing to accept defeat and is determined to regulate cryptocurrencies, even if it means stretching the law.

The SEC’s actions have created uncertainty and confusion in the cryptocurrency industry. Investors and businesses are now wondering what the future holds for digital assets.

Related: Hester Peirce is Rumored to be a Possible Replacement for Gary Gensler!

The SEC needs to do a better job of clarifying its position on cryptocurrency regulation. It also needs to be more open to dialogue with the cryptocurrency community. Only then can the SEC build trust and ensure that its regulations are fair and effective.

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