Prominent crypto lawyer, John Deaton, has criticized the US Securities and Exchange Commission (SEC) for its “stupidly outrageous” claims regarding Ripple’s native cryptocurrency, XRP. Deaton has highlighted the SEC’s argument that a person who acquires XRP in Japan is in a common enterprise with Ripple and all other XRP holders, despite Japan’s own regulator stating that XRP is not a security. XRP is currently the second most popular cryptocurrency in Japan.
Deaton argues that while Ripple’s sales of XRP may have violated US securities laws, claiming that XRP is always a security, regardless of the seller or the circumstances surrounding the sale, is an absurd claim that has no legal basis. He notes that there isn’t one case in 76 years since Howey that supports such a claim.
According to a recent study on Non-Performing Assets Cases and Cryptocurrency in Japan, the popularity of XRP in the country is due to its association with Japanese VC firm SBI Holdings. XRP was found to be the favorite cryptocurrency for 25% of respondents, while Bitcoin’s popularity stood at 26%. Ethereum was a distant third in terms of popularity.
SBI’s links with Ripple date back to 2017, which was when XRP became popular in Japan. The CEO of SBI Holdings, Yoshitaka Kitao, was recently part of Ripple’s board of directors, and SBI’s shareholder benefit in XRP made news in January 2023. The company offered its shareholders an incentive option of receiving benefits in XRP.
While the SEC’s claims regarding XRP’s status as a security continue to be a topic of debate, many in the crypto community are hopeful that the case will provide much-needed clarity on the regulatory status of digital assets.