CryptoLaw founder and Ripple lawyer John Deaton said the SEC is “exploiting the legal uncertainty about crypto” to redefine what should be considered a security under the Howey test.

Deaton believes that the regulator’s litigation against crypto companies “pushes the boundaries” of what constitutes an investment contract and a common enterprise in the U.S. — which are the foundation of what defines securities in the law.

Deaton wrote that when the SEC initially filed its complaint against Ripple he expected the regulator to point out certain XRP sales that could potentially have failed to pass the Howey Test.

However, the SEC’s complaint against Ripple claimed that every XRP sale ever conducted is a securities sale. The watchdog based it on the argument that XRP’s “very nature” is to be a security as it is the “very embodiment of an investment contract” in Ripple Labs.

(by Assad Jafri)