- Attorney John Deaton alleges SEC’s concealment of ‘Howey Memo,’ raising concerns about transparency and its potential impact on the XRP lawsuit.
- John Deaton criticizes former SEC Chair Jay Clayton’s past controversies, including conflicts of interest and connections to the Corporation Service Company (CSC), raising questions about financial misconduct.
During the intense legal dispute involving Ripple Labs and the U.S. Securities and Exchange Commission (SEC), attorney John Deaton, who is advocating for XRP token holders, has put forth surprising claims that have sparked significant worries regarding the transparency of the regulatory body.
SEC’s Hidden ‘Howey Memo’
In an unexpected twist, attorney John Deaton has alleged that the U.S. Securities and Exchange Commission (SEC) concealed a confidential document referred to as the ‘Howey Memo.’ Dated June 2018, this memorandum reportedly delves into the SEC’s perspective on categorizing XRP, a well-known digital currency.
Here’s the point to consider: on June 13, 2018 Clayton and Hinman receive the #XRP Howey Memo 📝, written by SEC enforcement lawyers. The Memo does not conclude by making any recommendations of any nature. It certainly does not recommend an enforcement action against @Ripple… https://t.co/RaGsGl1MOX
— John E Deaton (@JohnEDeaton1) August 28, 2023
At the core of Deaton’s inquiry lies this pivotal query: If members of the SEC were characterizing XRP as an unregulated investment or security within the memorandum, why was this not disclosed to the public, and why isn’t it being treated as pertinent evidence in the ongoing legal dispute? Deaton regards it as questionable that the memo doesn’t clearly articulate the classification of XRP as a security.
The memorandum carries substantial significance due to its susceptibility to multiple interpretations. On one hand, it could imply a degree of uncertainty within the SEC regarding how to classify XRP as a security. Conversely, it may support Ripple’s argument that XRP does not fall under security. Consequently, this document’s contents can significantly impact the direction of the ongoing legal proceedings.
Deaton takes this further by suggesting that the memo may not align with the SEC’s current position and could imply that XRP fails to meet the criteria for classification as a security according to the well-known ‘Howey Test.’ This revelation has sparked substantial speculation within the XRP community and the legal arena.
Judge’s Agreement on Howey Test
Deaton noted that Judge Analisa Torres had also concurred with the Howey Test argument, acknowledging that XRP token sales did not satisfy its criteria. In light of this, he expressed that questioning Clayton and Hinman in court would be advantageous for the XRP community.
Furthermore, he suggested that the SEC might want to keep the memo hidden because it could be detrimental to their position. Deaton questioned why the agency wouldn’t disclose the document if it didn’t explicitly classify XRP as a security.
John Deaton’s Vocal Critique of Anti-Crypto Figures
After the Grayscale Bitcoin ETF case defeat, ETFs’ popularity has surged among cryptocurrency enthusiasts and those outside the crypto sphere. Former SEC Chair Jay Clayton recently gained attention by stating that the approval of a Bitcoin ETF is ‘inevitable.’ However, in a recent social media post, attorney John Deaton, known for his involvement in the Ripple case, strongly criticized the former SEC Chair, revisiting past controversies.
John E. Deaton, a vocal presence on Twitter, has not hesitated to express his opinions and has openly criticized Gary Gensler, the SEC, and various anti-crypto entities, including politicians. Deaton has recently turned his attention to the former SEC Chairman, declaring, ‘I will never let Jay Clayton off the hook.’
I will never let Jay Clayton off the hook for putting his own interests above everything else. Rolling Stone Magazine was 💯 correct when it described him – at the time of his SEC appointment: as “The Most conflicted SEC Chair in History.” Do a little research. https://t.co/erYi3w5bYJ
— John E Deaton (@JohnEDeaton1) September 4, 2023
Deaton began by referencing Rolling Stone Magazine’s coverage of Jay Clayton’s appointment as SEC Chair in 2017, which described him as ‘the Most Conflicted SEC Chair Ever.’ Then-U.S. President Donald Trump nominated Clayton for the role
In his social media post, Deaton highlighted the connection between CSC (Corporation Service Company) and Jay Clayton, a controversial topic during Clayton’s tenure as SEC Chair. Deaton revealed that Clayton’s family has ownership ties to CSC.
CSC holds significance because it serves as an agent for thousands of businesses, with these businesses also using CSC’s address as their legal address, which has raised questions.
According to Deaton,
“It has been alleged that CSC acts as a “conduit for creating shell corporations and other sketchy vehicles used in tax evasion and money laundering.”
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