Pro-XRP legal expert John Deaton has once again criticized the US Securities and Exchange Commission (SEC) Chairman Gary Gensler and called for his dismissal from the Commission. Deaton believes that Gensler lacks knowledge and competence when it comes to understanding what investment contracts, also known as securities, mean.
Deaton’s criticism stems from an old clip in which Gensler mentioned that Ethereum had transformed from a security to a non-security as it became more decentralized. Deaton argues that Gensler doesn’t understand that securities laws cannot apply to the purchase of an asset for non-investment use cases. This issue is especially relevant as the SEC is accused of giving Ethereum preferential treatment while alleging that XRP is a security. Ripple, the company behind XRP, is currently engaged in a legal battle with the SEC, which claims that Ripple sold its XRP tokens as unregistered securities.
Deaton also questions Gensler’s knowledge of the Supreme Court’s ruling in the Forman case. This ruling reaffirms the Howey test established in the SEC v. Howey case and states that courts should consider the “economic realities” standard when determining whether an investment contract exists. This means that courts should focus on the substance rather than the form when assessing whether federal securities laws should apply. In line with this, Judge Analisa Torres recently ruled that Ripple’s sales and distributions of XRP didn’t constitute investment contracts and that XRP itself isn’t a security.
Deaton accuses Gensler of disregarding the law by admitting that the SEC refuses to consider the common enterprise factor of the Howey test when determining whether something is a security. He argues that Gensler’s actions show a lack of regard for the law.
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This is not the first time Deaton has criticized Gensler. Last week, he referred to the SEC Chairman as a “Megalomaniac” who believes he is above the law. Deaton took issue with Gensler’s seeming focus on having the court agree with his stance on cryptocurrencies, rather than being guided by the court’s interpretation of whether these tokens fall under the purview of federal securities laws and the SEC.
Deaton concludes his criticism by stating that Gensler “must go,” suggesting that the SEC Chairman needs to resign or be removed from office due to his alleged incompetency. It seems that Deaton may not be alone in his criticism, as Congressman Warren Davidson has introduced the SEC Stabilization Act, which aims to restructure the agency and remove Gary Gensler as its chair.
The fate of Gensler at the SEC remains uncertain, but it is clear that his actions and stance on cryptocurrencies, particularly XRP, have attracted significant criticism from industry experts like Deaton and lawmakers like Congressman Davidson. As the legal battle between Ripple and the SEC continues, the outcome could have far-reaching implications for the regulation of cryptocurrencies and the future of the SEC.
