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John E Deaton Profile picture
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16 Jul, 4 tweets, 5 min read
It is without question or debate that #ETH started out as - and fit perfectly - the definition of an investment contract (aka security).

Way more than #XRP ever could.

In the clip shared by Eri, a co-founder admits that #ETH started as an #ICO.

They raised $18 million from
9k people around the world. At the time of #ETH’s ICO, the #ETH blockchain WAS NOT yet developed. It was developed one year later using the $18 million.

This exact scenario was shutdown by the Court in the #Telegram case.

@novogratz bought 500k #ETH and @VitalikButerin stated
that without that purchase of #ETH the Ethereum Foundation would not have survived. Vitalik also stopped the exchanges from trading #ETH on a particular occasion (with good intentions). These examples are not representations of decentralization, however.

Please know that I own
#ETH and I’m very long #ETH. I don’t believe it’s a security today and I certainly don’t want the #SEC to go after #ETH.

But the truth is that the creation of #ETH meets the Howey factors even easier than the W.J Howey Co. met the 4 factor test in 1946 (ie read the dissent).

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More from @JohnEDeaton1

John E Deaton Profile picture
17 Jul
One reason of many why the Hinman Deposition is a BIG DEAL:

Excerpt of Hinman Speech:

“And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure,
current offers and sales of Ether are not securities transactions.”

Hinman met with a founder of #Ethereum 1 week before the speech and again afterwards.

1) Putting aside the fundraising is a BIG ASIDE;

2) What did the founder say that helped form his “understanding”;
3) @Ripple’s lawyers will have him walk through his “understanding” of decentralization;

4) have him admit he communicated his understanding to market participants which created the standard within the market;

5) show that #XRP’s decentralization meets that understanding; and
Read 4 tweets
John E Deaton Profile picture
15 Jul
The fight over the Hinman deposition has now just begun. It will be a heated “meet and confer” meeting I can promise you that.

If I was a lawyer for @Ripple I would find out immediately if the #SEC intends to object to several basic non-privileged questions about the Hinman
#ETH isn’t a security speech:

1) how many drafts did the speech undergo;

2) who helped draft or compose the speech;

3) who reviewed the speech before you gave it;

4) did you submit the speech to any of the commissioners or Chairman;

5) anyone outside of the #SEC assist you;
6) what research, articles, publications or technical resources did you review before giving the speech;

7) what input did the founder of the #ETH foundation provide you before reaching your opinion;

8) what other digital assets did you review or compare to #ETH before speech;
Read 5 tweets
John E Deaton Profile picture
23 Jun
A 🧵 about investment mistakes from a guy that has made them all. Topic:

WHEN SHOULD I SELL?

We have seen the Crypto market drop over 50% from its previous highs earlier this year.

IMO the decision to sell is the hardest decision anyone is faced with when investing money.
It doesn’t matter if you’re investing in cryptocurrencies or stocks. Whether it’s #Bitcoin or #AMZN, selling is a difficult call to make.

My personal struggle with the “should I sell” decision is likely a common struggle.

The decision to buy is easy. You’ve done your research
and you truly believe in the utility of the token - so you buy. In a bull market with everything going up - you buy. You believe in the business or the product - so you buy. You believe you have inside information - so you buy. You experience FOMO - so you buy.
Read 18 tweets
John E Deaton Profile picture
20 Jun
@sprwn is relying on what the @SEC_News said about me in response to #XRPHolders motion to intervene. I quoted an old adage in my reply brief:

“When You Resort to Attacking the Messenger and not the Message, You Have Lost the Debate.”

Many people didn’t read the reply brief.
But considering @sprwn has used the SEC as his only source in his unprovoked attack of me, I will quote my response to the SEC’s attack so that it is in proper context for those that are unaware:

“The SEC has attempted to portray XRP Holders’ counsel as an unhinged conspiracy
theorist crusader unfairly targeting the SEC. Attorney Deaton’s criticism of the former leadership of the SEC is mostly based on the media’s reporting regarding troubling discoveries of conflicts of interests, self-dealings and personal gain regarding former Director of
Read 14 tweets
John E Deaton Profile picture
14 Jun
Months ago I tweeted that the most important decision a prosecutor makes is at the beginning of a case when he decides what charges to file.

I predicted that the decision to charge @bgarlinghouse and @chrislarsensf with aiding and abetting would come back to haunt the @SEC_News.
The SEC charged the two executives with reckless conduct for the entirety of their tenures working at @Ripple.

What that means is that the SEC must prove that Brad and Chris actually believed #XRP was a security or it was reckless for them not to realize #XRP was a security.
When determining recklessness the court looks to what an objective person would believe under the circumstances.

What Ripple is arguing here is that if at any point during the last 8 years the SEC failed to classify #XRP as a security in connection with their own policies,
Read 12 tweets
John E Deaton Profile picture
8 Jun
AND WHAT IS THE LAW:

“Cryptocurrencies (sometimes called tokens or digital assets) are a lawful means of storing or transferring value and may fluctuate in value as any commodity would. In the abstract, an investment of money in a cryptocurrency utilized by members of a
decentralized community connected via blockchain technology, which itself is administered by this community of users rather than by a common enterprise, is not likely to be deemed a security under the familiar test laid out in S.E.C. v. W.J. Howey Co.”

-Judge Castel (Telegram-1)
Judge Castel also made clear:

“the security in this case is not simply the Gram, which is little more than alphanumeric cryptographic sequence. Howey refers to an investment contract, i.e. a security, as ‘a contract, transaction or scheme’,”

- J. Castel (quoting Howey)
Read 6 tweets

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