- John E. Deaton questions the unexposed status of the secret Howey memo.
- The Howey memo was the document handed over to William Hinman and Jay Clayton prior to the Hinman speech.
- Deaton claims that the memo might have argued that XRP is not a security.
XRP lawyer John Deaton has created ripples in the crypto community with his intriguing questions on the secret “Howey memo”, a confidential note that the former SEC officials William Hinman and Jay Clayton received from the regulator’s enforcement lawyers in 2018. In a recent video, Deaton shed light on the ambiguities around the memo’s concealed status.
On August 28, Deaton took to Twitter to provide insights on the Howey memo’s mysterious content, highlighting the possibility of its representation of Ripple’s XRP as a non-security. He also drew attention to a questionable passage of Hinman’s speech, in which Hinman acknowledged bitcoin and ether as being non-securities, while conspicuously omitting any mention of XRP, a major rival to ether at the time.
In the video, Deaton hinted that the Howey memo might not have classified XRP as a security, and suggested this may be why the memo remains undisclosed. He suggested that if the note had, in fact, labeled XRP as a security, there would be no particular reason for the document to remain concealed from the public. Deaton asked:
How come the Howey memo isn’t an exhibit? How come Jay Clayton and William Hinman didn’t say XRP sale was clearly a security? Because at best the memo said XRP was given away by Ripple for a non-investment purpose.
According to Deaton, the Howey memo was presented to Hinman two months prior to the famous Hinman speech, indicating that the official had ample time to analyze the text. Reflecting on a meeting between Ripple CEO Brad Garlinghouse and the SEC officials, Deaton spotlighted that officials should have confirmed the security status of XRP if it was clearly mentioned in the memo. Instead, Clayton’s response to Garlinghouse was optimistic- “I encourage you to keep talking to the staff about that”.