Renowned pro-XRP lawyer John Deaton, representing thousands of XRP holders, has shed light on the potential paths Ripple and the United States Securities and Exchange Commission (SEC) might take if they choose to settle amidst ongoing speculation. Deaton’s insights come in the wake of the Coinbase vs. SEC lawsuit, which holds significant implications for the regulatory landscape.
Coinbase Case’s Influence on Ripple-SEC Settlement
Deaton emphasizes the weight of the Coinbase case and its potential impact on a Ripple-SEC settlement. If the judge presiding over the Coinbase lawsuit grants the exchange’s motion to dismiss, it would signify that token sales on the platform are not subject to U.S. securities laws, excluding crypto staking from this judgment.
John Deaton noted:
“The only way Ripple and the SEC could settle before the end of the year is if Judge Failla grants the Coinbase motion to dismiss or partially grants it, finding that token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws.”
The only way @Ripple and the @SECGov settle before the end of the year is if Judge Failla grants the @coinbase MTD (or partially grants it – finding token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws but allows the staking component… https://t.co/0KzGT1l0OI
— John E Deaton (@JohnEDeaton1) September 2, 2023
Approval of the motion to dismiss would severely limit the SEC’s ability to appeal, making a settlement a highly plausible option. Even if an appeal were possible in such a scenario, the agency’s authority would be significantly diminished.
Ripple’s Opposition and Legal Basis
In a filing dated September 1, Ripple expressed that the summary judgment did not sufficiently address the legal basis for an interlocutory appeal. Ripple’s opposition hinges on the argument that the SEC deviated from established legal perspectives, specifically in applying the Howey test to XRP sales.
Ripple’s Legal Battle and Recent Developments
The SEC filed a lawsuit against Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen in December 2020, causing several exchanges to delist XRP to avoid potential legal repercussions. However, a favorable ruling by Judge Analisa Torres in July prompted many exchanges to relist XRP.
Throughout 2023, the SEC has pursued various cryptocurrency firms, including Binance and Coinbase, on allegations of securities violations. Notably, asset manager Grayscale recently celebrated a legal victory against the SEC through a successful appeal, mandating a review of its application for a spot Bitcoin exchange-traded fund.
As stated by John Deaton, the outcome of the Coinbase vs. SEC lawsuit holds immense significance, as it could reshape the regulatory landscape for token sales on exchanges.
Should the court grant Coinbase’s motion to dismiss, the SEC’s ability to pursue an appeal would be significantly curtailed, potentially leading to a viable pathway for Ripple and the SEC to reach an agreement.
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