John Deaton, the lawyer representing over 75,000 XRP holders, recently opined that the United States Securities and Exchange Commission (SEC) can only be forced to settle the ongoing XRP lawsuit with Ripple.
Speaking at a recent X space, Deaton dismissed speculation that the SEC was considering a settlement, highlighting the regulator’s reluctance to engage in negotiations with Ripple. He said they can only be forced to the settlement table.
John Deaton noted:
“I don’t think the SEC has a settlement on their mind. I think that they are going to be forced to the table. But I don’t think that they are there yet.”
Deaton’s analysis centers around his assertion that the SEC’s leadership, led by Gary Gensler, harbors an “arrogant” attitude towards the case. He argued that the regulatory agency did not expect strong defense from Brad Garlinghouse and Chris Larsen after the lawsuits were filed against them.
Furthermore, Deaton pointed out that the regulatory agency did not expect the significant impact that the opinions of 75,000 XRP holders could have on the court’s decision.
Despite recognizing the possibility of the SEC crafting a Ripple settlement that allows the regulator to pursue other crypto projects, Deaton contended that such a decision would be precarious due to the conditions Ripple would likely impose as part of the settlement. Therefore, he believes that a settlement is unlikely unless Ripple’s key arguments are acknowledged.
Notably, Ripple aims to establish that secondary market XRP sales do not constitute securities transactions, aligning with recent court rulings. Additionally, Ripple seeks recognition that its On-Demand Liquidity (ODL) platform, which utilizes XRP, is not breaking any security law.
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One of the key reasons cited by Deaton for the SEC’s potential resistance to settling with Ripple is the impact it would have on the regulator’s lawsuit against Coinbase. The SEC filed a lawsuit against the cryptocurrency exchange in June, alleging that it operates an unregistered securities exchange.
If the SEC were to accept Ripple’s claims, Coinbase could argue that it only operates as a secondary market, effectively undermining the core claims behind the SEC’s case.
Considering these complex dynamics, both the Ripple and Coinbase cases are expected to prolong into the next year, which could ultimately provide much-needed regulatory clarity for the crypto industry. Deaton concluded that a resolution would enable the flourishing of underlying technologies within the US market, fostering innovation and growth.
As this legal battle unfolds, all eyes remain on the SEC’s response, with Ripple supporters hoping for a breakthrough that could alter the course of regulatory oversight in the crypto space.