Ripple argues that XRP shouldn’t be classified as security
Founder of Crypto Law, John Deaton, believes that the SEC would have been wrong if the SEC had labeled ETH as a security. He explains the reason that ETH, like XRP, is an alphanumeric code. “If the SEC labeled ETH as a security, that would be wrong.”
The CryptoLaw founder is also of the opinion that cryptocurrencies like XRP, ETH, ALGO, ADA, XLM and others that have traded for 5 to 10 years should be treated as commodities, not securities.
In December 2020, the Securities and Exchange Commission filed a lawsuit against Ripple Labs, alleging that the company and its executives sold $1.3 billion worth of XRP in an unregistered securities offering. In the ongoing lawsuit, Ripple argues that XRP should not be classified as a security, which would subject it to greater regulatory scrutiny.
At the heart of Ripple’s lawsuit is a speech given in 2018 by former SEC official William Hinman that said ETH was not a security. According to Ripple, the documents are needed to prove that the company did nothing wrong and that the SEC arbitrarily chose winners and losers in the new cryptocurrency market.
Regulatory concerns
In a thread of tweets, the CryptoLaw founder weighs in on speculations that the SEC might go after ETH after its move to proof of stake, or the “Merge.” Deaton wrote, “Is ETH safe from Gensler? Ethereum’s transition to PoS in September is a dangerous bet on decentralization that could attract the eyes of regulators. Can we truly rule out Gensler suing ETH after the move to PoS?”
“There is some fear that Gensler will go after ETH due to increasing pressure for the IG investigation,” he added. Some believe that Gensler may be going after ETH and is trying to downplay the claim that the SEC is picking winners and losers through “selective enforcement”.
This comes after the SEC testified that it “doesn’t engage in selective enforcement” at a congressional hearing.
Deaton cited a case filed by the SEC against Dragonchain, an ERC20 token governed by the Ethereum network. The founder of Cryptolaw expressed his displeasure over the recent comments made by ETH creator Vitalik Buterin. While he also highlighted the conflict of interest regarding the ETH free pass, Deaton says it is still not right for the SEC to go after ETH and its founders.
He says, “Today’s ETH isn’t a security — even after the Merge, just because it may appear more of a security than XRP or other tokens, doesn’t make it one.”
