Paul Grewal, Coinbase’s Chief Legal Officer (CLO), and John Deaton, a prominent pro-XRP attorney and advocate for XRP holders, engaged in a discussion on X that unveiled a crucial aspect of Ripple’s ongoing lawsuit.

Read Also: XRP Lawsuit: SEC Says “Ripple Is Wrong”. Here’s Why Legal Expert Is Worried

Speaking on Revak v. SEC Realty, a 1994 Second Circuit case, Grewal applauded a key ruling in the lawsuit, emphasizing the court’s nuanced interpretation of the Howey test. He argued that linking investor returns to promoter efforts isn’t enough to classify an asset as a security. The court stressed the need for a common enterprise heavily reliant on promoter expertise for investments to be tied to shared fortuity.

John Deaton’s Opinion 

Aligning with Grewal, John Deaton drew parallels between the Revak case and legal conflicts involving LBRY, Ripple, and Coinbase. He highlighted jurisdictional intricacies, noting the relevance of the Second Circuit’s oversight in the Revak case to both Ripple and Coinbase proceedings.

When people brought up the district court ruling in @LBRYcom, my response, every time, was: read the 2nd Circuit Revak case. LBRY was a case governed by the 1st Circuit & the SG case. The @Ripple & @coinbase cases are governed by the 2nd Circuit & Revak. https://t.co/tuUvX6iDME

— John E Deaton (@JohnEDeaton1) January 28, 2024

The ongoing legal battles with the SEC involving Coinbase and Ripple are pivotal for the crypto industry’s trajectory. A recent development on January 18 allowed the SEC to proceed with its lawsuit against Coinbase, but the federal judge concurrently narrowed the lawsuit’s scope by excluding specific SEC claims.

This decision is a partial victory for Coinbase, mitigating potential legal liabilities. Simultaneously, Ripple confronts challenges as the SEC files a motion compelling the production of additional internal documents related to XRP sales.

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Read Also: Ripple CEO Slams SEC Chair, Calls Him “Political Liability” Over XRP Lawsuit

However, the road ahead remains challenging. The SEC’s recent request for additional internal documents from Ripple highlights their persistence in the pursuit of the case. Similarly, Coinbase still faces the now-narrowed lawsuit from the SEC, leaving the company in a state of uncertainty

The SEC is keeping up its persistent and aggressive pursuit of its case against Ripple. The outcomes of these legal battles extend beyond the involved entities, influencing regulatory frameworks in the rapidly evolving crypto space.

The frustrations from the lawsuit recently prompted Ripple CEO Brad Garlinghouse to suggest an unconventional source for a regulatory framework. The crypto world is eagerly waiting for a resolution to this lawsuit, as that will bring the crypto industry closer to proper regulation in the U.S.

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The post XRP Proponent Points Up Key Factor in Ripple’s Win Against the SEC appeared first on Times Tabloid.

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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