Thread by @JohnEDeaton1

Here is how the Judge could give Ripple an outright win. People are focusing on the pre-1933 Blue Sky argument. That argument is for the 2nd Circuit and Supreme Court. I don’t believe Judge Torres agrees with that argument although the current Supreme Court could.

https://twitter.com/jayvthegreat/status/1616452078343229441

I’m not saying it will happen. I’m just addressing Jay’s concerns or thoughts.

The judge could absolutely get around Ripple’s sales of #XRP b/c the SEC didn’t go transaction by transaction applying the Howey test to each transaction. Instead it went w/ what I wrote in my brief.

Essentially the SEC is applying the old “But For” causation test in this case. The SEC essentially argues but for Ripple executives (Jed, Chris) creating XRP, XRP wouldn’t exist. But for Ripple helping create a secondary market for XRP, a secondary market wouldn’t exist.

Look at what I wrote above. The SEC said past sales were securities. The SEC said present sales are securities. The SEC even argues if a country (outside of U.S. jurisdiction) declares XRP a currency it will only be b/c of Ripple’s efforts (even future - yet unknown efforts).

In other words, if El Salvador 🇸🇻 would have made #XRP legal tender like it did w/#BTC , the SEC is claiming it would all be due to Ripple’s past, present and future efforts.

It is an extraordinarily all-encompassing theory. But that’s not how securities laws get applied.

Think of how arrogant the SEC is to claim that if a foreign country deems something legal tender, it will still be a security.

The way the Judge could give Ripple an outright victory is simply reject the SEC’s sweeping claims and say you didn’t prove any specific transaction.

The SEC is all over the place w/ identifying the common enterprise. First it was Ripple. Then its Expert said it was the entire XRP ecosystem which includes the exchanges, all XRP holders and even independent developers like @Spend_The_Bits, which offers an alternative to ODL.

But then the SEC abandoned its so-called BS Expert and didn’t rely on that testimony. Instead, the SEC argued #XRP represents the common enterprise while also arguing #XRP represents all of the promises and efforts made by Ripple.

What this means is the SEC is essentially arguing that #XRP itself meets the second and third prongs of the Howey test as a matter of law.

The SEC has the burden of proof. It has failed to satisfy the second prong of Howey and it has failed to go transaction by transaction.

This is why I’m confident the SEC is NOT granted summary judgment in the manner they have requested. It is also why I could see the judge saying denied and arguing the jury must decide certain issues (eg non-investment uses of #XRP, recklessness, fair notice, etc).

What some people have failed to consider is that Judge Torres could say denied to both summary judgment motions and it goes to a jury. Until we get to read all the Rule 56 facts and read all the underlying evidence relied upon, it’s near impossible for me to predict anything more

The SEC’s claims unconstitutionally expand Howey beyond recognition. Remember, the SEC admitted in its response to my Writ of Mandamus that it is the Court that will decide whether the SEC’s theory is valid. I’m confident Judge Torres rejects the SEC’s wild sweeping theory.

https://twitter.com/cryptolawus/status/1616131567176368138