Howey Doin?

Part VI - Is John Deaton Right or Wrong?

John Deaton is often characterized as a pro-XRP attorney by the media, but if you ask him, he would probably say it’s not about XRP, it’s about preventing SEC overreach. At least that’s what this tweet of his indicates:

Deaton has been very active on Twitter, often posting long threads where he offers his arguments in byte-sized fashion. One of his main arguments is that secondary market crypto transactions are not investment contracts. Is he right or wrong?

Well… Remember our promise to you. We offered you a new lens. We said:

The purpose of this series, in conjunction with this entire newsletter, is to give you what we believe is the legal equivalent of that new and improved vision; a clearer view through a new lens. If you just choose to look at the world through that lens, we believe what you will see may surprise you. 

The purpose of this post is simple. We’ll look at a few of John Deaton’s tweets and analyze them through our unique lens. When we do that, everything checks out. There are no loose ends and no contradictions. Have we piqued your interest yet? Let’s dive in:

This one has a simple explanation under our lens. The SEC’s reliance on using Howey is the same as the Hawaii family’s reliance on using a car to get off the island. Once you start with Howey in its original form, the common enterprise arguments won’t necessarily make sense. John Deaton is simply pointing that out. That, however, does not mean that the SEC is wrong in its conclusion, it just means that the SEC is using the wrong vehicle to get to its destination.