SEC Chair Taken to School in Latest Major XRP Win, Says Pro-Crypto Lawyer

Following another massive win for Ripple in its ongoing case against the SEC, a pro-crypto lawyer has noted how the Judge “schooled” SEC Chair Gensler in the ruling.

Pro-crypto lawyer John Deaton, the founder of the Deaton Law Firm, has weighed in on a recent decision by Judge Analisa Torres in the ongoing Ripple vs. SEC lawsuit. As The Crypto Basic reported, Judge Torres’ Tuesday decision denied a motion by the SEC to appeal an earlier ruling.

The court had earlier ruled in July that XRP tokens sold in blind bid-ask transactions on crypto exchanges did not constitute securities transactions. However, the SEC moved to appeal the decision, an attempt that the court has now denied.

According to the latest court verdict, the SEC can only appeal the decision after a trial on pending issues. The court also provided a clear response to some of the issues raised by the SEC in its appeal, an outcome that pro-crypto lawyer John Deaton has applauded.

@GaryGensler this is the judge, after listening to you ⛽️ 💡 the American people over expectations of profit, taking you to school on the Howey test. https://t.co/tfqxaBYLF0

— John E Deaton (@JohnEDeaton1) October 4, 2023

Court Explains “Expectation of Profit” in Crypto Trades

In a recent comment regarding the verdict, John Deaton noted how Judge Analisa Torres literally schooled the SEC Chair Gary Gensler on the “Howey Test,” which was the main principle behind its lawsuit against Ripple.

The Judge presented an example of an everyday user who goes on a crypto exchange and finds that the price of XRP has dramatically increased.

The Judge argues that the user may decide to buy XRP based on the recent price increase and also have an expectation of profit, even without knowing about the existence of an entity called Ripple.

According to the Judge, such a purchase, although motivated by an expectation of profit, was not derived from the “entrepreneurial or managerial efforts of others,” as the Howey Test requires.

The Howey Test, meanwhile, requires that an individual knows that the profit on their investment would come from the effort of an underlying company in which it makes the investment. The Judge ruled that this is not the case in secondary XRP sales and thus denied the SEC’s appeal.

Following the latest ruling, the Ripple v. SEC case is set to proceed towards trial. The court has scheduled April 23, 2024, and will provide its verdict on other issues raised by the SEC in its earlier lawsuit against Ripple.

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