- John Deaton argues ADA, MATIC, XRP, and ALGO are not securities.
- Deaton saying those tokens are software codes.
- Lawyer Hogan points out that Coinbase has to defend the non-security status of numerous tokens.
Classifying crypto tokens as securities remains a hot topic in the crypto community, given the ongoing suits against Binance and Coinbase. John Deaton, a prominent lawyer advocating for XRP, challenged the notion.
Deaton argued that tokens such as ADA, MATIC, XRP, and ALGO should not be labeled as securities. He emphasized that these digital assets are code sequences existing in software and traveling through cyberspace.
The lawyer asserted that the classification of tokens as securities should be determined based on the landmark Howey case, which sets a precedent for evaluating investment contracts.
Notably, Deaton’s remarks were in response to crypto lawyer Jeremy Hogan’s analysis of Coinbase’s latest court filing in its ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC).
As Coin Edition reported yesterday, Coinbase has filed a motion to dismiss the SEC’s suit, describing the regulator’s claims as beyond regulatory and legal boundaries.
Furthermore, Deaton referred to the Telegram case, where the GRAM token was deemed not a security by the court. According to him, the court stated that it is ‘immaterial’ whether the underlying asset is speculative or possesses intrinsic value.
Drawing analogies to tangible assets like groves, animals, beverages, chinchillas, or real estate, Deaton argued that labeling a token as a security solely based on the seller or the circumstances surrounding the sale is an unconstitutional shortcut.
Starting the conversation thread, crypto lawyer Jeremy Hogan tweeted that the main challenge Coinbase faces in its legal battle with the SEC. Hogan pointed out that Coinbase has to defend the non-security status of numerous tokens, posing a significant hurdle in the lawsuit.
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