John Deaton, the lawyer representing more than 70,000 XRP token holders in a class action lawsuit against the SEC, says it’s unfair to punish people who have “no idea of who Brad Garlinghouse is” 10 years after Ripple’s ICO.
Deaton has been working on behalf of XRP investors who suffered significant losses when the SEC forced US-based exchanges to de-list XRP after Ripple was targeted.
In an interview with Fox News this week, Deaton said that the SEC should “go after Ripple” if it can prove a case. However, he added that it’s unfair to go after traders – referred to in the interview as “collateral damage” and “roadkill” – 10 years after they purchased their XRP.
“When you say that a person who has never heard of Ripple or has no idea of who Brad Garlinghouse is, purchased XRP on Coinbase, and you start claiming that token 10 years later is an unregistered security, now you’ve stretched that Howey case beyond recognition,” said Deaton.
Deaton’s argument rests on the assertion that based on the Howey case as cited by the SEC, the underlying asset – in this case, the XRP tokens – is not referred to as security. Rather, this is the term used to describe the sales and service contract, as well as the scheme itself.
In other words, if anybody has a case to answer, it’s Ripple.
“In 76 years when you look at all the SEC cases coming from the Howey case there’s never been a case where there’s been absolutely no privity between the purchaser and the buyer,” added Deaton.
Exactly who is Gensler looking out for?
During the Fox interview, Deaton also called into question SEC chair Gary Gensler’s motives when it comes to deciding who he’s actually going to talk to.
“These are the people that Gary Gensler swore to protect. Instead of talking to us and reaching out to us, he filed a motion to revoke our standing in court and personally have me thrown out of court,” said Deaton.
“He [Gensler] has met Vanguard seven times since being SEC chair. Why is that relevant? Because Vanguard manages 90% of his $120 million fortune. Who’s he protecting?” (our emphasis).