Lawyer John Deaton, who defends the interests of XRP holders, called on the US regulator to re-examine the Howey test after his statement that XRP has no intrinsic value.
Crypto-Law founder John Deaton once again criticized the US Securities and Exchange Commission (SEC) for not fulfilling its purpose when prosecuting cryptocurrency companies. According to Deaton, the regulator, along with many federal agencies, ignores the law in its desire to achieve the desired goal, as evidenced by the situation with the Ripple company.
Deaton's comments come after Australian lawyer Bill Morgan also criticized the SEC for arguing that XRP has no intrinsic value. Morgan said the SEC made this claim at the summary judgment stage in the Ripple case. Therefore, Deaton recommended that the agency take another look at the Howey test, which helps determine whether an asset qualifies as a security.
The lawyer quoted a passage from it: “The Howey test tests whether the scheme involves the investment of money in a common enterprise with a profit derived solely from the efforts of others. If the answer is yes, then it does not matter whether the enterprise is speculative or not, and whether there is a sale of property with or without intrinsic value.”
Deaton also mentioned former SEC employee Bill Hinman's testimony in the Ripple case. The lawyer quoted his sworn statement: “The SEC is not required to satisfy all the requirements of the Howey test to prove that sales of crypto assets qualify as an investment contract.”
The lawyer cited two main reasons why Hinman could have made such comments: either Hinman was incompetent to lead the SEC's finance division, or he could have lied under oath. At the same time, Deaton noted that Hinman led Alibaba’s IPO in 2014, so he cannot be incompetent.
