In a long Twitter thread, Attorney John Deaton has given his insight on a recent post by Charles Gasparino in New York Post, which questioned Judge Anita Torres’ verdict on XRP and Ripple and stirred debate among XRP supporters. Deaton has held his stance, saying that Judge Torres’s SEC v. Ripple case ruling is very sound.
Deaton defends Judge Torres’ XRP ruling
While Judge Torres received education from Havard, Gasparino described her as “acutely witless.” Furthermore, he called her ruling “absurd,” “weird,” “bizarre,” “madness,” and “dangerous,” in the article.
However, many legal professionals and crypto enthusiasts have defended Judge Torres’ ruling. A pro-XRP attorney, John Deaton, took to Twitter to criticize Gasparino for his article. Deaton spoke out against the “tribalism and echo chamber politics” surrounding the case. According to the attorney, the SEC has not consistently regulated cryptocurrency.
The attorney argued that many first-time buyers of XRP bought the token without being aware of Ripple. Deaton believes these persons were unaware that Ripple provided software to banks or held 50% of the total amount of XRP. He pointed out that the judge was right in her judgment on the sale of XRP on the secondary market since it is challenging for purchasers to expect profit from a company they are unfamiliar with. He clarified that some first-time buyers only bought XRP since it was one of the top three coins available and had faster transactions than Bitcoin, which takes 10 to 60 minutes. Thousands of XRP holders, according to Deaton, bought the coin for non-investment purposes.
Despite assertions that Judge Torres’ finding is at odds with the policy objectives of the 1934 Securities Act, Deaton asserted that Judge Torres’ ruling was 100% the correct ruling. Intriguingly, Deaton highlighted a video he had published in which he predicted Judge Torres would decide that XRP secondary market transactions are not securities.
Additionally, Attorney Deaton called out critics of Judge Torres’ judgment who expected the Second Circuit would reverse it as bitter losers. He remarked that Judge Torres performed her duties by applying the Howey criteria to the case’s circumstances.
Attorney Deaton examined Judge Torres’ track record on appeals for those who predicted that her ruling would be reversed. According to Deaton, the Second Circuit has historically considered 29 of Judge Torres’ judgments during her tenure as a judge. Six of the 29 cases were remanded, meaning the judge sent the cases back for additional proceedings.
He also pointed out that it would take more than good fortune for Judge Torres’ decision to be overturned. He concluded that Judge Torres would render a similar finding on remand even if the SEC successfully appealed. This time, according to Deaton, the Howey test’s common enterprise factor would be used to select.
Deaton finished by emphasizing that the SEC has no prospect of successfully challenging the judge’s decision by citing the common enterprise element. He further maintained that the SEC had failed to prove the common enterprise element of the lawsuit.
Murphy says Gasparino’s article was ill-informed.
James A. Murphy (MetaLawMan) also agreed with Judge Torres’ decision and referred to Gasparino’s piece as “ill-informed and nonsensical.” He pointed out that Gasparino accused Judge Torres’ law clerks of being ignorant of how stocks operate. Gasparino, however, failed to make the crucial distinction between stock and cryptocurrency tokens whereby, when you purchase a token, you do not gain equity in the firm. Crypto tokens do not come with rights against the project or firm issuing them, in contrast to shares, and hence a token like XRP is not a security.
He also pointed out how judges do not get to clap back when they come under the irrational criticism of politicians or columnists like Gasparino. When attacks against the judiciary are made, it is the duty of lawyers and the American Bar Association to respond forcefully, he said.
