- John E Deaton, an attorney who has keenly followed the lawsuit, has stated that the only victory for SEC is that Ripple sold XRP as unregistered security between 2013 to 2017.
- Last month, Attorney Deaton slammed the agency for its confusing common enterprise argument.
The Ripple Labs and the US Securities and Exchange Commission lawsuit is still awaiting a final ruling to end the two-year-long legal battle over alleged sales of unregistered securities. On February 15, a lawyer and digital asset enthusiast Bill Morgan posted Ripple’s previous quarterly report indicating that the company has been selling XRP with on-demand liquidity (ODL) transactions since 2019. In this case, XRP works as an immediate cross-border payment rather than an investment asset to make a profit.
In response, John E Deaton, an attorney who has keenly followed this case has stated that the only victory for SEC is that Ripple sold XRP as unregistered security between 2013 to 2017.
I’ve said this is the biggest danger to Ripple. I predicted it would be the focus of the SEC’s motion for summary judgment. The SEC argued it but not as much as I predicted. The SEC didn’t go transaction by transaction on sales, so the “offer” is the biggest danger.”
According to him, this is based on how SEC chooses to plead the case, that is, going by the almost all-or-nothing approach. Deaton believes that if this assertion comes out to be true, there would be no injunction or disgorgement but rather, a fine. Regardless, how the judges see it would play a huge role.
Attorney Deaton slammed SEC for an unstable common enterprise argument in the Ripple case
Last month, Attorney Deaton slammed SEC for its confusing common enterprise argument. The Agency initially labeled Ripple as a common enterprise according to him. Later, one of its experts testified that the common enterprise includes the “entire XRP ecosystem, including investors and crypto trading platforms.” This made SEC change its argument. After Ripple strongly contested this, SEC put aside the expert’s testimony as claimed by Deaton. Based on the way it presented the enterprise argument, Deaton believes that the court would not grant SEC a summary judgment. Also, he stated that the SEC case of what constitutes a common enterprise is a “schizophrenic argument”.
What this means is the SEC is essentially arguing that #XRP itself meets the second and third prongs of the Howey test as a matter of law.
The SEC has the burden of proof. It has failed to satisfy the second prong of Howey and it has failed to go transaction by transaction.
This is why I’m confident the SEC is NOT granted summary judgment in the manner they have requested. It is also why I could see the judge saying denied and arguing the jury must decide certain issues (eg non-investment uses of #XRP, recklessness, fair notice, etc).
The attorney earlier stated that it is very difficult to predict events in the lawsuit. The reason is that he has not yet read the underlying evidence relied upon and all Rule 56.1 facts.
The entire crypto community is very expectant about the outcome of the case as the decision can go a long way to affect the industry. Interestingly, Ripple CEO Brad Garlinghouse is very certain of victory.
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XRP is currently trading at $0.39, and the possibility of hitting $10 could be high in the long run depending on the outcome of the case.
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