John E Deaton Profile picture
Feb 2 6 tweets 3 min read
Kudos to @davidmicahels for tackling this case and recognizing the significant impact it could have on the SEC’s ability to regulate the crypto industry. What makes this case both very different and more dangerous than other cases is the @SECGov is attacking the token itself.
In previous cases, the SEC alleged specific sales during a specific time period constituted illegal security offerings. Here, the SEC claims that every transaction from 2013 until today - made by anyone - including secondary market sales independent of @Ripple - are all illegal.
B/c of the amazingly over broad allegations implicating retail holders of #XRP, over 64K #XRPHolders filed a motion to intervene asking to be sued as co-defendants - an extraordinary request. Recognizing the damage caused, Judge Torres granted #XRPHolders amicus status.
Make no mistake about it, if the SEC is successful in declaring today’s #XRP a security, then every altcoin is in danger - including #Ether. Below, I give a brief Howey analysis demonstrating why the SEC will fail. 👇
I would encourage David to do a follow up article considering this story is too big w/ too much at stake to not include the entire story. Why did Clayton file a case of this magnitude on his last day? Why the mass exodus of all the senior SEC leadership behind bringing the case?
We need someone like David to ask these obvious but necessary questions. This story can’t be told w/o recognizing the gross appearances of impropriety and massive conflicts of interests. Hell, one of the SEC’s own, Joe Grundfest, questioned the true motive behind the lawsuit.👇

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More from @JohnEDeaton1

Feb 2
First, let me say I agree with Jake. The number one concern for regulators should be protecting investors from fraud, misrepresentation, pump and dump schemes, and flat out scams.

But there’s also the question of:

Who’s regulating the regulator?
The best thing the @SECGov can do is clean it’s own house and restore the public’s confidence. Over 63K #XRPHolders, w/ 2K non-#XRPHolders, seek an independent investigation into the gross appearances of impropriety and huge conflicts of interests regarding the case against XRP.
I recently started a petition for International #XRPHolders requesting the Financial Oversight Committees demand an investigation. In 2 weeks we already have 20K signatures.

Before anyone attempts to label me and my 65K friends conspiracy theorists, read the Grundfest letter.
Read 9 tweets
Jan 31
I’ve stated from the beginning, had the SEC charged @Ripple for specific sales of XRP during early years, I would’ve NEVER sued the SEC. But it did the opposite and even went further claiming today’s secondary market sales are also illegal. Yet, the @BlockchainAssn is quiet. Why?
To be fair, I haven’t reached out and asked for any help or assistance. Since others are questioning why some haven’t offered support, I can only speculate that its b/c I’ve called out and brought attention to the #ETH free pass. Which, if true, is both juvenile and shortsighted.
The SEC is claiming b/c Ripple was instrumental in creating a secondary market for #XRP, ALL #XRP are therefore securities. If successful, the same thing could be argued 🆚 @VitalikButerin @ethereumJoseph @ConsenSys etc.
Read 4 tweets
Jan 25
THE WORST 🧵 I’VE EVER WRITTEN (I’m sorry)

One question I get asked every time I’m on a podcast or being interviewed, is to provide an estimate of how long the @SECGov 🆚 @Ripple case will take to resolve either by settlement or by judgement.
If you’ve watched those interviews, you know I placed a lot of emphasis on the 👩‍⚖️ Judge’s DPP ruling.

I said if the Judge pierced the deliberative process privilege and ordered the SEC internal documents produced, we could see a settlement w/in 90 days thereof.
I also said if the Judge 👩‍⚖️ rules the documents don’t have to be produced to Ripple, I believe the case will go to Summary Judgement; and, possibly, a jury verdict.

The judge gave a mixed ruling. The SEC’s big victory is that most of the documents DO NOT have to be produced.
Read 18 tweets
Jan 23
ABSOLUTE, CONCLUSIVE & IRREFUTABLE PROOF!

Bill Hinman intentionally misled the public as Director of Corporation Finance while at the @SECGov.

Watch the 4 min @CNBC clip👇 and then read the brief 🧵 that follows.

On Dec. 13, 2017, Hinman had a meeting w/ @ethereumJoseph & @ConsenSys and lawyers from Sullivan & Cromwell (Clayton’s law firm);

The next day, Dec. 14, 2017,
@MattCorva of Consensys (w/ lawyers from Sullivan & Cromwell) stated that they were building an alliance with the SEC;
Six weeks later, on Jan. 25, 2018, Clayton meets with Chris Dixon and Andreesen & Horowitz of @a16z and instructs him to put together a group w/in the industry and write up a memo. Perkins Coie, a member of the Enterprise Ethereum Alliance, led this group of #Ether investors;
Read 8 tweets
Jan 22
#XRPHolders shouldn’t allow detractors to create and push a sour grapes narrative. Under the law, selective enforcement claims do not win and are not very persuasive. Just b/c #ETH got a free pass related to it’s ICO, doesn’t make #XRP a non-security.
Just b/c an argument can be made that, today, the #XRPL is more decentralized than the #Ether network - doesn’t mean #XRP isn’t a security. I watch #XRP or @Ripple detractors attempting to create the sour grapes narrative.
When someone asks me why today’s #XRP is not a security, I do not discuss or bring up #Ether in the answer.

What our opponents are attempting to do is dismiss our argument as “you’re upset b/c someone else broke the law and didn’t get sued.”
Read 8 tweets
Jan 19
@EleanorTerrett and I were discussing the Judge’s ruling today
b/c, as usual, her and @CGasparino seem to be the only journalists recognizing the magnitude of this case on the overall Digital Asset space. I re-read the decision and here are my final takeaways:
The June 13, 2018 legal memorandum 📝 regarding whether #XRP is a security (conducted by SEC legal staff) IS PRIVILEGED and will NOT be turned over.

But the Judge noted that the legal staff members who wrote this analysis:

“did not present a recommendation to the SEC.”
This finding is VERY significant. This means that after the SEC’s legal analysis, as of June 13, 2018, they did not recommend bringing an enforcement action against @Ripple @bgarlinghouse or @chrislarsensf regarding #XRP as a security.
Read 18 tweets

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