John Deaton, the lawyer representing over 75,000 XRP holders, has recently outlined what he thinks could bring out a big win for Ripple, the US-based cross-border payment firm, in the ongoing lawsuit with the United States Securities and Exchange Commission (SEC).
According to Deaton in a series of tweets, the judge may eventually rule that only XRP’s early sales violated the Securities Act. Howbeit, he said Ripple could request a jury trial for SEC’s failure to give a “fair notice” of a likely violation.
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Deaton pointed out that since the judge ruled to unseal the Hinman documents, there has been speculation that it might end in a split decision.
The lawyer also said if the judge allows a jury to decide if Ripple had fair notice, it should be seen as a big win for Ripple.
John Deaton noted:
“Remember, we haven’t seen the the 56.1 statements and counter statements filed by the parties. The 56.1 statements and counter statements is where each party cites indisputable facts and evidence supporting their position for summary judgement.
“Thus, it is very difficult for anyone, including me, to accurately weigh specific evidence submitted by the SEC and Ripple. For example, everyone knows that Ripple’s Blue Sky argument is that there must be an underlying contract before the Judge can even apply the Howey test.
“However, in its summary judgment brief, Ripple admits that there were XRP sales made by Ripple that did have a written contract as part of the sale. Ripple argues that b/c those contracts did not obligate Ripple to take post-sale actions for the benefit of the XRP Holder, and b/c these written contracts did not allow any XRP Holder to demand anything from Ripple, and these contracts did not allow the buyers to share in Ripple profits or grant any equity of any kind to the XRP Holders, these contracts cannot be deemed investment contracts.
“Personally, I’ve stated that I don’t believe Judge Torres will agree with Ripple’s underlying contract argument, which also means she may also reject the argument that if there is a written contract it must impose post sale obligations on the seller (Ripple).
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“Attorney Jeremy Hogan is correct and this is why Ripple’s Fair Notice Defense should be viewed as an insurance policy. If the Judge finds Ripple violated Section 5 b/c these specific sales constituted investment contracts, Ripple argues the jury must decide if Ripple had fair notice.
“Since the judge’s decision regarding what can or cannot be sealed (e.g. the Hinman emails), many people are discussing a split decision: Ripple gets tagged for early XRP sales but ODL and secondary market sales are found to be non-securities (and XRP itself is not a security).
“If the above scenario happens AND the Judge agrees w/Ripple that the jury must then decide whether those early sales should be excused because Ripple lacked fair notice that XRP sales were effectively illegal (unregistered), it can only be described as a TOTAL VICTORY for Ripple.
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