A pro-XRP lawyer has discovered a hidden clue in a Ripple legal document that could undermine the SEC’s lawsuit against the company. The clue is a footnote that reveals that XRP holders may have a strong case against SEC that declared Bitcoin and Ethereum as non-securities.

The lawyer, John Deaton, shared his findings on Twitter on May 22. He explained that the footnote, which he had overlooked before, confirmed that XRP was in fact debated “between SEC staff prior to the Hinman speech.” This is potentially significant because it could show that the SEC was not consistent or clear about its classification of XRP as a security.

The SEC sued Ripple in December 2020, alleging that the sale of its cryptocurrency, XRP, was an unregistered securities offering. Ripple has denied that XRP is a security, arguing that it does not satisfy the Howey Test, which is used to determine whether a transaction involves security.

The footnote, which Deaton believes comes from a third-party outside of the SEC, stated: “There are reasonable grounds to conclude that XRP does not satisfy all elements of the Howey Analysis and is therefore not a ‘security’ for purposes of the federal securities laws.”

Deaton also pointed out that in June 2018, when William Hinman, then the director of the SEC’s Division of Corporation Finance, gave a speech that stated that Bitcoin and Ethereum were not securities, XRP was the third largest crypto asset by market cap. He suggested that some SEC officials may have thought that XRP should be treated similarly to Bitcoin and Ethereum.

Deaton is representing thousands of XRP holders who have filed a motion to intervene in the SEC vs. Ripple case. He claims that the SEC’s lawsuit has harmed XRP investors by causing the price and liquidity of XRP to drop significantly. He also argues that the SEC does not have the authority to regulate XRP as a security because it is a digital currency.

The case is still ongoing and both parties are expected to file their responses to the motion to intervene by June 2.