XRP Lawsuit: John Deaton States Why SEC Motion for Summary Judgment Would Be Denied

The SEC’s victory over LBRY in the LBC token lawsuit earlier this year has raised the question of whether a similar outcome would be seen in the longstanding Ripple-SEC case.

Given that both Ripple and LBRY cases with the United States Securities and Exchange Commission share some similarities, many opine that XRP will have the same fate as LBC. 

But Attorney John Deaton firmly believes that the SEC’s motion for Summary Judgment will not be granted by the presiding judge. According to him, “Ripple doesn’t have the burden of proof as the SEC does.” 

Per a Twitter thread, the court representative for over 75k XRP holders again shared crucial facts, stating why Ripple and its execs would scale through in the ongoing XRP lawsuit. 

Deaton noted that Ripple’s best chance at winning the XRP lawsuit at the district court level is with a strict Howey analysis. However, he shared his strong convictions on why District Judge Analisa Torres may not agree with the arguments brought forward by Ripple in its initial Motion for Summary Judgment. 

According to him, Ripple’s initial summary judgment brief was written specifically for the 2nd Circuit and above, as he claimed it was an Appellate Ready brief. 

Read Also: MicroStrategy’s Saylor Urges the SEC to Shut Down Ripple, Says ETH and XRP Are Unregistered Securities

He wrote, “I don’t believe Judge Torres is going to agree with that argument. It would require her to believe Judge Castel was wrong in Telegram as well as several appellate courts. Ripple’s best chances at winning at THIS LEVEL  is with a strict Howey analysis – which brings us to LBRY.”

“The Ripple/XRP case is in the 2nd Circuit. LBRY isn’t. Plus, LBRY didn’t contest the common enterprise factor – Ripple AND  XRP Holders, who were granted Amicus by the Judge more than one year before any other Amici joined, VIGOROUSLY contested the common enterprise prong of Howey.”

Going further, Deaton gave several facts that go against the SEC’s greatest weapon – the Howey Test. First, he stressed that “there is no correlation between XRP’s price and the efforts of Ripple, citing that XRP holders can stake or collateralize their XRP and obtain a financial benefit whether Ripple is successful or not.” Accordingly, this destroys the 3rd prong of the Howey Test. 

The attorney also added that he submitted a whopping 3,000 XRP purchaser affidavits which demonstrated that XRP holders do not rely on the efforts of Ripple to generate a profit or to receive a financial benefit. “The affidavits show the judge how XRP holders receive a financial benefit – independent of Ripple – by owning XRP itself,” he remarked.

Related: Cardano Creator Thinks Settlement of XRP Lawsuit Would Be “Catastrophic” for Crypto Industry

To further emphasize that SEC’s summary judgment motion would be denied, John Deaton indicated that the XRP digital token, XRP holders, and companies utilizing XRP will still flourish, even if Ripple shuts down. This contrasts with the SEC’s argument in the filed motion.

“Hence, if Ripple ceased to exist and burned its XRP, thus causing others, alleged to be in the common enterprise w/Ripple, to benefit, it is a scenario that does not fit the common enterprise/joint venture scheme the Howey Court envisioned when determining an investment contract,” Deaton commented. 

It is worth noting that both Ripple and the SEC have filed their Motions for Summary Judgment as they anticipate a ruling in 2023. Notably, about 14 amicus briefs have been submitted by third parties in support of Ripple while the SEC received only one support from amicus briefs.

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