John E. Deaton, the lawyer representing over 75,000 holders in the ongoing Ripple-SEC lawsuit, and Coinbase’s Chief Legal Officer, Paul Grewal, share a resolute belief that the SEC’s interlocutory appeal is destined for rejection.
The U.S. Securities and Exchange Commission (SEC) is under increasing scrutiny for its seemingly inconsistent and irrational arguments in its enforcement actions against cryptocurrency companies.
Read Also: XRP Lawsuit: John Deaton Predicts Judge Torres’s Decision on SEC Interlocutory Appeal
These concerns are particularly evident in the XRP lawsuit, where judges have criticized the SEC’s positions, calling them “arbitrary and capricious” with Judge Netburn labeling the inconsistency in their argument as “hypocrisy” in the Ripple lawsuit as reported by TimesTabloid
SEC Hypocrisy
John E. Deaton has drawn attention to the fact that both federal judges and members of Congress are taking notice of what they perceive as hypocrisy within the SEC’s actions.
Interestingly, even Paul Grewal of Coinbase has used the term “hypocrisy” in his assessment of Ripple’s response to the SEC’s interlocutory appeal. Grewal also commended Stuart Alderoty, the Chief Legal Officer at Ripple, and his legal team for laying waste to the hypocrisy in a post on X.
In response to Coinbase CLO’s assertion, Deaton wrote, “Very interesting that Paul Grewal uses the word hypocrisy. Judge Netburn used the same word to describe the SEC’s inconsistent positions as well.”
Also, when Deaton was asked a question related to the SEC’s hope in the potential interlocutory appeal, he opined that the securities regulator would fail.
No way IMO.
— John E Deaton (@JohnEDeaton1) September 2, 2023
A pivotal point of contention revolves around the SEC’s insistence on the “question of law” requirement for interlocutory appeals. This is a legal term referring to whether an appeal primarily deals with legal questions rather than factual ones. It’s also an argument that has faced historical rejection by many courts due to its apparent lack of authority which the SEC has failed to address.
Read Also: XRP Lawsuit: Legal Expert Shares Likely Timeline of SEC’s Potential Appeal
Mounting Troubles
As earlier mentioned, Deaton highlighted that Judge Sarah Netburn, presiding over the XRP lawsuit, also voiced concerns about the SEC’s inconsistent stances, echoing sentiments expressed by judges in the Grayscale lawsuit who criticized the SEC’s actions as “arbitrary and capricious.”
Notably, the SEC failed to provide a convincing rationale for its rejection of Grayscale’s Bitcoin ETF conversion which caused the Judges to rule in favor of Grayscale.
Deaton and Grewal hold strong convictions that the SEC’s interlocutory appeal is treading on precarious ground. Deaton already gave his predictions on Judge Torres’s decision on the SEC interlocutory appeal and the mounting criticism and apparent inconsistencies in the SEC’s arguments are more than enough to inspire confidence that their appeal is destined for rejection.
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