Pro-XRP legal expert John Deaton has again come for the US Securities and Commission’s (SEC) Chairman Gary Gensler in its battle against Ripple. This time, he questions Gensler’s competence and calls for his dismissal from the Commission.
Gensler Doesn’t Know What Security Means
In a tweet shared on his X (formerly Twitter) platform, Deaton stated that despite his academic experience, Gensler doesn’t have a “clue” about what investment contracts (also known as security) mean. He further stated that Gensler continues to feign ignorance that securities laws cannot apply to the “purchase of an asset for non-investment use cases.”
Deaton was reacting to an old clip where Gensler mentioned that Ether had transformed from a security to a non-security as it had become more decentralized.
The lawyer’s comments come amid the ETH Gate saga and the long-running legal battle between Ripple and the SEC. The SEC is said to have given Ethereum a ‘regulatory free pass’ while alleging that XRP was a security. Gensler and the Commission maintain that Ripple violated securities laws when it sold its XRP token as unregistered securities.
Further questioning Gensler’s knowledge, Deaton mentioned that Gensler may not know about the Supreme Court’s ruling in the Forman case (something which could explain why Gensler has maintained a hard stance on crypto being securities).
In that case, while reaffirming the Howey test stipulated in the SEC v. Howey case, the Supreme Court ruled that courts should consider the “economic realities” standard when determining what classifies as an investment contract. As such, courts should look at the substance rather than the form when deciding if the federal securities laws should apply.
In line with this, it is believed that Judge Analisa Torres rightly applied the law when she ruled that Ripple’s programmatic sales and other distributions didn’t constitute investment contracts and that XRP isn’t a security in itself.
Gensler Lacks Regard For The Law
In his tweet, Deaton again stated that Gensler disregards the law. He made this statement in reference to the fact that the Commission has “publicly admitted” its refusal to consider the common enterprise factor of the Howey test when determining what constitutes security.
Last week, Deaton had tagged Gensler as a “Megalomaniac” who thinks he is above the law. Then, he was commenting on an interview where Gensler seemed to be more bothered about a court agreeing with his stance on cryptocurrencies rather than being guided by the court as to whether these tokens fall under the purview of the federal securities laws and the SEC.
Meanwhile, Deaton mentioned that Gensler “must go,” likely suggesting that the Chair needs to resign or be removed from office due to his incompetency. Gensler’s days at the SEC could be numbered, as Congressman Warren Davidson introduced the SEC Stabilization Act, which aims to restructure the agency and remove Gary Gensler as its chair.