John Deaton is a highly accredited lawyer who has been recognized for advocating for fair crypto regulations. Recently, he has been speaking on the SEC's 'shifting stance' on its common enterprise argument in the Ripple case. A common enterprise is one of the criteria the SEC uses to decide whether a transaction is considered a security. Deaton refers to this coming and going of stances from the SEC 'the schizophrenic defense'.

The US Securities and Exchange Commission (SEC) panel has argued three times about the common enterprise argument since their case against Ripple began. Firstly, the SEC asserted that Ripple was a common enterprise. However, this argument was put aside after Ripple argued that XRP holders did not receive any profits from the profits they received from merely owning the currency. Following this, the SEC changed its argument to that the whole XRP realm is a common enterprise, which incorporates all XRP holders, exchanges that list the coin, and vendors that accept it as an interchangeable payment. To strengthen their argument, the SEC involved the help of an expert witness who proposed that all XRP holders relied on Ripple's hard work in order to receive gains. The ament argument did not stand however, as the Judge deemed the opinion unsatisfactory, due to the 3000 affidavits from Ripple and the amicus brief from Deaton on behalf of the XRP holders.

At this point, the SEC changed their theory for a third and final time. This time, they claimed that the XRP currency represented the 'common enterprise'. Reaction to the SEC's proposals, stretched from the XRP community and other notable lawyers, with some labelling the argument as 'insane'. Bill Morgan, a lawyer with a notoriety of his own, noted the common enterprise argument was a 'moveable feast' with there being no common enterprise at all.

Stuart Alderoty, General Counsel of Ripple, uncovered SEC's argument in the 1946 Howey case in which they tried to argue that as long as there was a 'community of interest', a 'common enterprise' was not essential. Alderoty stated that a common interest does not equate to a 'common enterprise'.

The SEC, and more so Ripple, have a long way to go in proving whether Ripple is considered a security or not and the 'common enterprise' argument is only one of the many facets involved in this landmark case. Whether Ripple be declared a security or not is yet to be seen.



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