The crypto space is abuzz with renewed interest as prominent pro-XRP lawyer and enthusiast, John E. Deaton revealed the existence of an undisclosed XRP memo from years ago. 

On August 27, lawyer and digital analyst, Bill Morgan replied to a comment made by a fellow X user, Sandy Seth. In this response, Seth had asked Morgan if the SEC presented a memo confirming that XRP did not fulfill the Howey Test. 

The question itself triggered a ripple effect that resulted in a series of arguments and discussions on the Ripple case, pushing Deaton to reveal information about the memo’s contents. 

Although a firm advocate for Ripple’s win against the SEC, Deaton first refuted claims of divulging that the memo drew inferences of XRP being security. He instead said that the memo’s information was not available to the public; however, he revealed that it was written by the United States Securities Exchange Commission’s (SEC) enforcement lawyers. 

To be clear, I didn’t say the memo concluded XRP is not a security. The memo was found to be privileged and not disclosed so I haven’t read exactly what it says. But Judge Netburn found it important to note that the authors of the memo, who were Enforcement lawyers at the SEC,…

— John E Deaton (@JohnEDeaton1) August 27, 2023

Deaton also stated that the memo was “inconclusive” with reasons being that if the memo affirmed that XRP was a security, then the SEC would not sit on it, but would take proper legal actions against Ripple. 

The lawyer, however, claimed a possibility of the SEC using unjustifiable means to push the Ripple case forward, disclosing that prominent crypto critic, John Reed Stark has also revealed that a proper investigation should be put in place. 

“I believe Ripple will ultimately lose but also believe that if there were unlawful acts by an SEC official, then the IG should investigate,” Reed previously stated in an X post. 

Deaton made arguments about the SEC being aware of Ripple’s operations for years. He said that many prominent exchanges and crypto firms had used XRP as a form of payment or listed the cryptocurrency on their platform, which should confirm that the cryptocurrency was not a security. 

“Over 1700 vendors accepted XRP for payment, including Time Magazine. Also in 2019 the FSOC filed its annual report and highlighted XRP along with Bitcoin, Ether, and Litecoin, stating that these “virtual currencies” were significantly growing in market cap. Every single financial leader in the U.S. Government signed that report including Jay Clayton,” Deaton explained. 

He further added: “Also, in 2019 MoneyGram filed a form with the SEC disclosing it would be using XRP in its cross-border payments business.

Deaton also revealed that in 2015, the US Government issued an independent audit to keep track of XRP sales and audit all sales. The audit operations had seemingly gone on for years, giving the government three years’ worth of XRP sales reports and information. 

He added that in 2019, the SEC released a regulatory framework for digital assets which stated if a token functions as a virtual currency and can be readily used as “payments or as a substitute for fiat currency,” then it does not satisfy the conditions of the Howey test.

The Howey test here is a test used to determine whether a financial instrument is a security or not, and Deaton claims that the token in 2019 ticked all the boxes to not be regarded as a security. 

All things considered, the case between Ripple and the US SEC is still ongoing as the regulator filed an interlocutory appeal to reevaluate Judge Analisa Torres’s decision that programmatic XRP sales do not qualify as securities.

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