John Deaton Highlights SEC Schizophrenia Defense in Ripple Case
- John Deaton highlighted the absurd allegations made by the SEC in the lawsuit against it.
- The cryptocurrency lawyer believes the securities regulator is devising schizophrenic defenses to its claims.
- The lawsuit against Ripple has seen the SEC change its claims more than three times.
John E Deaton of Crypto Law has accused the US Securities and Exchange Commission (SEC) of making schizophrenia defenses in its lawsuit against blockchain solutions firm Ripple. Deaton recently highlighted that the securities regulator is constantly shifting claims against Ripple regarding what constitutes a joint venture.
Let’s not forget the SEC’s schizophrenic theory as to what constitutes the joint venture in the case. First, Ripple was the joint venture. Ripple forced them to give up #XRP They receive no interest in Ripple whatsoever by owning #XRP. So what did the SEC do? https://t.co/zPB7uVewOB
– John E. Deaton (@JohnEDeaton1) May 14, 2023
John Deaton took to Twitter earlier today to list what he called the “ridiculously” allegations made by the SEC in the lawsuit filed against Ripple in December 2020. The majority of those allegations were made in an attempt to satisfy the controversial Howey test by proving the existence of a joint venture. .
The Howey test comes into play if there is an investment of money in a joint venture with a reasonable expectation of profits to be obtained from the efforts of others. Deaton reminded his followers that the SEC initially claimed the joint venture in the lawsuit was Ripple.
This claim was waived by the securities regulator after Ripple proved that XRP holders received no interest in the blockchain company by owning XRP. This prompted the SEC to change its theory and claim that the entire XRP ecosystem constitutes the joint venture. This included all holders of XRP, exchanges that have listed XRP, and suppliers that have accepted XRP as a form of payment.
In order to bolster the new claim, the securities regulator relied on the testimony of an expert witness who testified that all XRP holders should rely on Ripple. However, the judge overseeing the case dismissed this argument.
This led the SEC to change back to what Deaton described as a “schizophrenia defense”. According to the SEC’s latest theory regarding the existence of a joint venture, XRP itself represents the joint venture in question, which John Deaton thinks is a crazy argument.
John Deaton’s post highlights Schizophrenia’s defense in the SEC’s Ripple case appeared for the first time in Coin Edition.