Lawyer John Deaton says U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler is pushing legal boundaries for accusing technology company Ripple of violating securities laws.
In a lawsuit filed in 2020, SEC claims that Ripple illegally sold XRP without registering it, the San Francisco-based firm countered by saying that the token is a digital asset and not a security.
In a new opinion piece published on Bloomberg Law, Deaton says that the SEC’s allegation that XRP is a security is beyond what was contemplated by law and related court rulings on securities.
“The US Supreme Court issued the landmark SEC v. Howey decision in 1946, laying out a specific definition of what constitutes a security. Those justices couldn’t have guessed how complex digital commerce over encrypted lines of computer code would fit in almost a century later.
This goes beyond anything the 1933 Securities Act and over 250 federal appellate and Supreme Court decisions about securities law ever imagined.”
The pro-XRP lawyer says a regulatory framework is good for the crypto industry, but Gensler’s notion that cryptocurrencies should be regulated as securities pose dangerous legal and economic implications.
“The Securities and Exchange Commission under Chairman Gary Gensler has its own idea of how cryptocurrencies should be regulated today, but bears little resemblance to that decision—and it’s straying into dangerous legal territory in court.
I’m all for clear rules and regulations to protect people. But the SEC is exploiting legal uncertainty about crypto to radically redefine what constitutes an investment contract and a common enterprise in the US.”
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