Ripple case: SEC emails suggested XRP was not security

• SEC emails suggest XRP doesn’t satisfy all Howey factors, John Deaton notes.
• The lawyer says SEC staff noted “reasonable grounds” to believe that XRP is not a security.
• The SEC sued Ripple Labs and two of its executives for selling alleged unregistered securities in the form of XRP.

In latest Ripple news, a lawyer says the ongoing court battle between Ripple and the US Securities and Exchange Commission (SEC) could be game over for the regulator should the case go to a jury. 

The attorney made the comments after stumbling on references of SEC emails in the briefs and arguments Ripple presented before court in this long standing battle.

XRP not a security? SEC emails on XRP and Howey test

John Deaton, a pro-XRP lawyer that has followed the SEC vs. Ripple case since its filing in 2020, says new email details suggest staff at the US Securities and Exchange Commission (SEC) seem to have indicated there are “reasonable grounds” to believe XRP is not a security.

The emails are highlighted as part of the footnote in Ripple’s arguments against the SEC allegations. One of these is “exhibit 220.” 

SEC staff states that there are reasonable grounds to believe XRP is NOT a security

THAT’S BY SEC ENFORCEMENT LAWYERS PEOPLE!

But the SEC charges @bgarlinghouse and @chrislarsensf with Recklessness because it’s so obvious that XRP is a security?

Absolutely shameful. https://t.co/5YMPYfLS1o

— John E Deaton (@JohnEDeaton1) May 20, 2023

Deaton said:

“Exhibit 220 is part SEC emails: XRP is mentioned and that there are reasonable grounds XRP doesn’t satisfy ALL Howey factors. HUGE.”

There’s also a citation of “SEC-LIT-EMAILS” which the lawyer points out relates to the Hinman emails.

“Since noticing this, I’ve been racking my brain about two things: 1) why wouldn’t Ripple lawyers make a much bigger deal about this (and not just include it in a footnote); and 2) how tf did I miss it before today (although to be fair I’ve read thousands of pages and do have a job)?” he tweeted.

As to why Ripple didn’t go hard on the SEC in light of these suggestions, he says it’s likely the fact that the information is not a direct quote from an SEC official. He argues that the emails might have been reference to an analysis of XRP and not an absolute statement of XRP not being a security.

SEC emails are “huge”, it could be game over if it goes to jury

Anticipation of a favourable ruling for Ripple continues to build across the crypto community. 

As CoinJournal covered here, this was evident when a recent ruling saw the XRP price react higher. And Deaton says the emails could be a game-changer in favour of the company if this goes to a jury. Some experts have opined that the SEC could choose to settle.

On June 13, 2018, SEC Enforcement lawyers wrote an XRP 📝 analyzing whether XRP satisfied Howey. Yet, the SEC did NOT recommend enforcement or a cease and deist letter to stop selling XRP. When you add that XRP 📝 w/this statement about XRP, it could be game over for a jury.

— John E Deaton (@JohnEDeaton1) May 20, 2023

The lawsuit between Ripple and the SEC began in December 2020, when the SEC filed a complaint alleging that Ripple had violated federal securities laws by selling XRP as an unregistered security. 

Ripple has denied the allegations and has accused the SEC of overreach.