The U.S. Securities and Exchange Commission (SEC) recently dropped all its charges against Ripple’s executives Brad Garlinghouse and Chris Larsen. With the case officially dismissed, the community has turned its eyes to the penalty phase where Ripple is expected to pay for violating securities laws in its institutional sales of XRP.
John Deaton, a prominent attorney and advocate for XRP holders in the ongoing Ripple-SEC lawsuit, recently shared valuable insights into the potential timeline and outcome of the ongoing case.
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Deaton’s Insights
On X, Deaton shed light on several critical aspects of the SEC vs. Ripple case. The lawyer expressed his belief that there hasn’t been a serious deliberation about a settlement between Ripple and the SEC.
He suggested that the regulatory agency is pursuing a substantial penalty of $770 million and is determined to hold Ripple accountable. Deaton stated, “The SEC is pissed and embarrassed and wants $770M worth of flesh.”
Deaton explained that the penalty phase is akin to a second legal battle involving depositions, document requests, and other investigative processes. Ripple aims to reduce the hefty $770 million penalty by excluding certain transactions and cutting down on various expenses.
Deaton compared the Ripple case to that of LBRY, where the SEC initially sought $23 million in penalties. It took eight months of litigation before a $130,000 fine was imposed, highlighting the time-consuming nature of these legal proceedings.
The Timeline of the Case
Deaton predicted that a final judgment by Judge Torres might not come until late summer or even a full year. The timeline for a potential appeal further extends the case’s duration.
He suggested that the SEC’s stance on the Ripple case might pivot based on the outcome of the Coinbase case. If Coinbase successfully dismisses its case, the SEC could be forced to reconsider its anti-crypto agenda and explore a potential settlement with Ripple.
The ongoing legal battle is taking a financial toll on Ripple. In September, Garlinghouse revealed that the company had spent over $100 million in legal expenses.
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Read Also: John Deaton: XRP Is The Only Altcoin With Pure Legal Status of Not Being a Security
Deaton’s Optimism
Despite the challenges Ripple faces, Deaton remains optimistic about the company’s chances in the case. He argues that this isn’t a fraud case but an attempt to determine a suitable fine for unregistered securities sales within the context of a new asset class recognized as “virtual currencies” by other federal agencies.
Deaton noted:
“I believe Ripple will be successful in cutting the $770M figure down drastically. This isn’t a fraud case. The goal is to reach an appropriate fine against Ripple for engaging in transactions that qualified as the sale of unregistered securities, but sold in the context of a new asset that other federal agencies declared “virtual currencies.“
Deaton also points to historical precedents where XRP was described as a “virtual currency” and was not subject to securities regulations. He mentions meetings between Ripple’s executives and key regulatory bodies to discuss XRP’s nature and role in solving banking issues.
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