The ongoing legal battle between Ripple and the SEC continues to hold the cryptocurrency industry on edge. But a recent exchange on X between two prominent figures has shed light on a crucial element, potentially reshaping the narrative and offering some hope for Ripple’s future.
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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