Security Arguments Raise Questions Regarding Undisclosed XRP Memo 

Sandy Seth, a fellow X (formerly Twitter) user, asked Bill Morgan if the SEC presented a memo that confirms that XRP did not fulfill the Howey Test. Bill Morgan, on August 27th replied that there was a memo the court did not order to be disclosed in which the Securities Exchange Commission (SEC) considered the issue. He thinks that he recalled John saying that had they concluded XRP was a security, the SEC would have disclosed it.

This question has activated a lot of arguments and discussions on the Ripple case which made Deaton reveal information about the contents of the memos. However, firm advocates for Ripple won against the SEC filing.

The Memo Information Was Not Available to the Public: Deaton

At first, Deaton disapproved of claims of disclosing that the memo drew inferences of XRP being security. He said that the information in the memo was not available to the public. He added that it was written by the U.S. SEC enforcement lawyers.

He tweeted that he hadn’t read exactly what the memo says but Judge Netburn found it important to note that the authors of the memo were enforcement lawyers. He also stated that if the memo confirmed that XRP was a security, then the SEC would take legal action against Ripple.

The lawyer claimed that there is a possibility that the SEC is using unjustifiable means to push the Ripple case forward. He divulged that the former SEC official John Reed Stark also revealed that a genuine investigation should be arranged.

Deaton says that the SEC has been aware of Ripple’s operation for years. Many exchanges used Ripple as a form of payment and this confirms that it is not a security. On estimation, about 1700 vendors accepted XRP as a payment mode which includes the Time Magazine as well.

In 2019, FSOC filed its annual report and highlighted XRP with Bitcoin, Ether, and Litecoin stating that these digital currencies are growing in market cap. Almost all the financial leaders in the U.S. government have signed the report including Jay Clayton.

Deaton also added that in 2019, MoneyGram filed a form with the SEC stating that for cross-border payments they would use XRP. He said that in 2019, the SEC released a set of regulations for cryptocurrencies

This states that if the digital currency is readily used as payment, then it does not satisfy the condition of the Howey test. He says that the token in 2019 ticked all the boxes to not be regarded as a security.

The case between the U.S. SEC and Ripple is continuing as the regulator filed an interlocutory appeal to re-evaluate Judge Analisa Torres’s decision that programmatic XRP sales do not qualify as securities.


The recent question on the XRP memo has raised a sparking interest from the crypto community on social media platforms. Sandy Seth elevates the question which in turn raises curiosity from many. This is answered by John E. Deaton that he didn’t say the memo concluded XRP is not a security. He added that if the memo confirms XRP as a security, then the SEC would take the required action. However, the token has taken all measures to not be regarded as a security.

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