Even if the SEC appealed, Ripple could win again, says pro-XRP lawyer John Deaton

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Renowned crypto lawyer John Deaton, who represents over 75,000 XRP holders, said on July 23 that an SEC appeal will not necessarily change the outcome of the Ripple ruling.

In the ever-changing landscape of crypto regulations, the recent Ripple ruling has sparked hope and uncertainty for the crypto industry. Earlier this week, the U.S. Securities and Exchange Commission (SEC) expressed its intentions to appeal part of the decision, which the agency said was “wrongly decided.”

The SEC takes offense with the part of the Ripple ruling concerning the retail sale of XRP on crypto exchanges. The judge ruled that the retail sale of XRP did not constitute securities sales but the SEC wants to appeal the ruling potentially.

However, Deaton noted in a Tweet that even if the SEC filed an appeal, it would take around two years before a decision is issued by the court. In the meantime, the Ripple ruling delivered by Judge Analisa Torres will continue to be the governing law, at least within the 2nd Circuit.

Appeal does not guarantee a win for the SEC, says Deaton

Deaton claimed that Ripple would potentially win in court a second time if the SEC moved forward with its appeal. As per Deaton’s analysis, even if the 2nd Circuit potentially disagreed with Judge Torres’ application of the third factor of the Howey Test, it does not guarantee a victory for the SEC.

The four factors of the Howey Test include (1) an investment of money, (2) in a common enterprise, (3) the expectation of profit (4) derived from the efforts of others. Any asset that checks all four boxes is classified as a security and governed by federal securities laws.

Judge Torres ruled that the retail sale of XRP did not meet the third factor of the Howey test because retail investors did not have a reasonable expectation of profit tied to Ripple’s success.

If the 2nd Circuit found Judge Torres’ application of the third prong of the Howey Test to be “wrong,” Judge Torres would likely assess the remaining two factors of the Howey Test, Deaton said. In that case, Judge Torres could “rule the EXACT SAME WAY” as the first time, after finding that the SEC did not satisfy the common enterprise factor, he added.

It is important to clarify that the Torres Decision is not binding beyond the Southern District of New York (SDNY). While a fellow District Judge within the SDNY could potentially disagree with Judge Torres, Deaton argues that such dissent would be less likely within the 2nd Circuit, especially considering her citation of Judge Castel’s ruling from the Telegram case.

Deaton further pointed to the Coinbase transcript as evidence that events seem to align with Judge Torres’ perspective. He suggests that there is already a consensus trend within the 2nd Circuit, indicating potential alignment of views with the Torres Decision.

SEC created a ‘mess’

Ripple CEO Brad Garlinghouse said the SEC has created a “mess” around protecting retail investors by claiming jurisdiction over cryptocurrencies.

“The SEC created this mess by proclaiming it was the cop on the crypto beat when it had no legal jurisdiction Where’s that gotten us? Consumers left holding the bag in bankruptcy court while the SEC holds press conferences.”

In a Tweet, Ripple’s chief legal officer Stuart Alderoty noted that SEC claiming jurisdiction over crypto is “simply a political power play” that “hurts everyone.”

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Pro-XRP Lawyer Shares Opinion PEPE Explosion, What Did He Say?

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Pro-XRP lawyer John Deaton has dropped his opinions on PEPE while the viral meme coin’s investors brood over its massive price plunge.

The Pepe the Frog-themed meme coin became prominent immediately after launch, rallying 1,000% within the first two days.

Pepe’s performance and increasing popularity secured it a listing on Binance, further pushing its price by over 200%. However, some investors were uncomfortable with the sudden price surge and have been asking questions. 

Deaton Suggests PEPE Is A Calculated Scam

Pepe coin’s explosive price actions moved the crypto industry. Bullish investors leveraged the coin’s growing popularity to accumulate more, while others appear to seek opinions from industry figureheads. 

Related Reading: Shiba Inu Coin Holders Hit Hard As 80% Of Addresses Smothered In Red

In a tweet, John Deaton revealed that he received several DMs and emails from people requesting his thoughts on PEPE. Deaton retweeted DeFi analyst Chris Blec’s opinion on Pepe.

In Blec’s tweet, the analyst warned people that Pepe is a carefully planned scam in which the creators use investors as pawns in a much bigger game.

In his words, such games have consumed the lives of many. He, however, advised investors to wise up. Deaton retweeting Chris Blec’s comment regarding Pepe as his response to people raised some questions. 

Did the lawyer investigate before arriving at this conclusion, or did he trust Blec’s words for what it is?

The crypto community reacted to Deaton’s opinion, some in support while others disagreed. A Twitter user @StanzaErick said he doesn’t understand why people should ask a lawyer for investment guidance.

Another respondent Mark Hawkes, a pro-XRP crypto enthusiast, agreed with Deaton that projects like Pepe could wreck retail investors.

The Current Price Outlook

Meanwhile, the meme coin isn’t doing well at the moment. The token’s price has gone the opposite of the bullish performances recorded two weeks ago.

It has lost most of its 7-day price gain over the past few days. The data shows the meme coin is down 38.46% over the past seven days. That’s not all. Pepe favored the bears for most of last week, with a 31.3% price decline on May 9. 

Related Reading: Ethereum Loses Grip On $1,800: Will The Bulls Barge In To Save The Day?

On May 12, it registered a 26.9% price decline before adding a 22.9% price gain on the 13th and 9.1% on the 14th.

Staying true to form, Pepe’s price has declined by a further 10.4% in the last 24 hours, with the technical indicators, including the Oscillators and Moving Averages, flagging strong sell signals.

PEPE falls drastically on the chart l PEPEUSDT on Tradingview.com

Pepe is currently trading below the 10-day exponential and simple moving averages, an indicator that the bears are in control. The possibility of the meme coin rebounding from the dump depends on the bulls’ ability to overturn the situation.

Featured image from Pexels and chart from TradingView

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Stop Protecting American Public, Pro-XRP Attorney Tells SEC Chair

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The pro-XRP Attorney and crypto lawyer John Deaton has told SEC Chair Gary Gensler to retreat his regulatory actions. The attorney demands that the commission stop protecting Americans by lashing on crypto companies.

The United States has increased the tension in its crypto industry through unclear regulatory measures. Crypto regulators like the Securities and Exchange Commission (SEC) also affect crypto firms with multiple enforcement actions. 

Related Reading: Bitcoin To Drop Further? Whales Show Signs Of Dumping

Stop Protecting American Public While Harming Crypto Firms, John Deaton 

In a statement via Twitter in response to Gensler’s post appreciating SEC’s staff for upholding the commission’s mission, Attorney Deaton asked SEC boss Gensler to stop protecting the American public.

On behalf of the American public we ask you to please stop protecting us.

— John E Deaton (@JohnEDeaton1) May 8, 2023

The SEC has enacted enforcement actions against several crypto entities through its forceful regulatory measures. Some include the Ripple (XRP) blockchain, Paxos (Issuer of BUSD stablecoin), Bittrex, Coinbase, and others.

In December 2020, the SEC sued Ripple Labs and some of its executives over the sale of XRP tokens under the Howey Test, stating that the asset passed the definition of an investment contract.

Attorney Deaton maintained that XRP is not a security but a digital currency, and the lawsuit has been taking several turns and is still ongoing.

The activity of the US SEC on crypto firms in the US has evoked a lot of reactions, especially from top firms such as Coinbase. However,  the commission has maintained that its actions are measures to protect Americans.

Moreover, in a video, last month, the SEC chair maintained that intermediaries for investment contracts should comply with securities laws and register fully with the SEC. 

He also said that the law only cares about “what something is and not what you call it” As such, digital asset investment firms that list securities must comply with the investor protection obligations like other firms.

SEC Pushing Legal Boundaries With Ripple Lawsuit

Crypto lawyer John Deaton mentioned earlier that the SEC is pushing legal boundaries by claiming that Ripple violated securities laws.

According to a Bloomberg Law publication, Deaton stated that the SEC’s allegation against XRP is beyond legal contemplation and court rulings on securities.

XRP trades at $0.4252 on the chart l Source: Tradingview.com

The lawyer mentioned that the US Supreme Court in 1946 defined security in its ruling on SEC v. Howey case. So, the ruling could not account for the complex digital assets with encrypted computer code after almost a century.

Featured image from Thinking Crypto and chart from Tradingview

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Pro-XRP Lawyer Weighs In On The Ongoing Lawsuit Ruling

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Bill Morgan has weighed in on discussions regarding the XRP lawsuit while the crypto community awaits the judge’s ruling. Morgan responded to a Twitter user, Marc Fagel, who’s been debating the XRP lawsuit with John Deaton.

Morgan noted that Judge Torres was clear regarding her line of judgment on the Ripple case. Notably, the main issue in the case is whether or not Ripple sold XRP as a security.

Bill Morgan on Judge Torres

In Bill Morgan’s opinion, Judge Torres will base her judgment on facts regardless of the SEC’s broad and undefined position. Also, Ripple argues that it did not require registration since it didn’t sell XRP as an investment contract.

Judge Torres made it very clear in the Daubert motion decision that the issue she must decide is whether Ripple sold XRP as a security despite the SEC taking broader positions at times in this litigation that seemed to suggest any sale of XRP was an investment contract or /1 https://t.co/HL1mclv8Xg pic.twitter.com/BrcHGAQlG9

— bill morgan (@Belisarius2020) May 8, 2023

However, the SEC took a broader stand that all XRP sales are securities, relying on the first allegation that Ripple distributed XRP through statutory underwriters.

XRP plummets by over 3% l Source: Tradingview.com

Morgan is unsure how Judge Torres will decide the case and why the SEC overstretches its positions towards XRP sales in the secondary market.

Morgan noted that the SEC argues that Ripple’s XRP continuous offering in the secondary market violates securities law, stretching toward ODL customers who are not investors. In addition, he said that all XRP sales occur in the secondary market since Ripple has only offered XRP to ODL partners since 2020.

He also responded to the founder of Crypto Capital, Justin Bons’ comment that Ripple’s defense hinges on XRP decentralization. According to Morgan, Ripple’s defense does not hinge on the XRP ledger’s decentralization but on the Howey test application. 

However, the court is yet to decide the factual relevance of decentralization based on the Howey test.

Congress Should Prohibit Regulators From Working At Firms They Regulated

Recall that John Deaton called out the SEC on May 5 for its broad and undefined position on the XRP lawsuit. Deaton further noted the SEC couldn’t tag XRP as security since the sales do not meet the prongs in the Howey Test.

The attorney weighed in again today, noting specific things that should change in the SEC. The US-based lawyer said Congress should pass a law prohibiting regulators from leaving to work at a firm they previously regulated for at least three years.

Featured image from Pexels and chart from Tradingview

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Pro-XRP Lawyer Castigates The SEC's Argument Saying It's Unfounded And Absurd

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Pro-XRP lawyer representing thousands of XRP holders as Amicus Curiae has slammed the US SEC’s position in the ongoing Ripple lawsuit.

In a tweet, John Deaton claims the SEC undermined its once credible case by quoting an unrelated legal document. Deaton believes the document, dubbed ECF 640, supported his claim when the SEC stated that the XRP purchase was an investment in a “common enterprise.”

“The quoted legal document supports [what I said] by stating that even if some country recognizes XRP as fiat currency in the future, it would still be considered a security.”

If El Salvador 🇸🇻 recognized XRP as legal tender, like #BTC – the SEC claims it still a security. 🤦‍♂️ https://t.co/fI1Ofn23iN

— John E Deaton (@JohnEDeaton1) May 5, 2023

According to Deaton, the SEC will still regard XRP as a security even if other countries recognize it as a legal tender.

SEC’s XRP Theory Is Indefinable In Time And Space, Says Deaton

Deaton argued that the SEC cannot boycott the Howey test by alleging that every XRP sale (before, now, and future) meets all the test’s prongs. He noted that no underlying asset in an investment contract was ever tagged security since the Howey test started 76 years ago.

The legal expert further explained that no investment contract exists without a legal relationship between the buyer and promoter. Deaton’s tweets suggest the SEC’s argument is absurd and lacks credibility. 

Deaton cited his Amici motion to the federal judge presiding over the Ripple case, Judge Torres. He addressed the SEC’s argument as a shorthand and analytically lazy contention, slamming the agency for tagging every XRP sale, from its ICO to the present, financial security. 

In the lawyer’s opinion, the scope of the SEC’s arguments is overstretched and indefinable in time and space.

Community’s Responses to Deaton’s Argument

Deaton’s tweets attracted other crypto proponents. While responding, a Twitter user @Kashta9 said he thinks the SEC’s position in the lawsuit is that all XRP sales, including those in the secondary market, are investment contracts. Other respondents said they don’t care about anybody’s opinion but the judge’s.

Related Reading: Why Is Bitcoin And Crypto Up Today?

Deaton ended his argument by expressing his confidence in Judge Torres’ ability to recognize and act according to the massive public interest in the XRP lawsuit.

XRP out of the bear trend l Source: Tradingview.com

The Ripple lawsuit is among the most viral topics in the crypto industry, with many anticipating a ruling in Q2 2023. A total of 75,000 XRP holders from the United States and 143 countries joined the Ripple lawsuit. However, no one can predict if it will become security until the judge pronounces judgment.

Featured image from Pexels and chart from TradingView

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Pro-XRP Attorney Shares Information That Could Be Bullish For Ripple

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In a new development, a pro-XRP attorney has shared some startling information that could point toward victory for Ripple in its ongoing securities battle against the United States Securities and Exchange Commission (SEC). This ruling in another case that was similar to what Ripple is currently fighting with the SEC shows there could be a positive outcome for the crypto firm after all of this.

A Case Similar To Ripple Gets Good Judgement

Attorney Jeremy Hogan took to Twitter to share a previous ruling by Judge Analisa Torres in another case involving a crypto mining company Rio Tinto and the SEC. In the cutout of the ruling posted by Hogan, it shows that the judge previously ruled that there was no liability on the part of Rio Tinto when “the sole basis for such claims is alleged misrepresentations or omissions,” something that is also present in the Ripple case.

Now, as expected, the SEC appealed the judgment by Judge Torres but the interesting thing is that the appellate court upheld the judgment. The crypto company emerged victorious in this case, as the judge did not see any evidence of scheme liability, saying that Rio Tinto only “failed to prevent misleading statements from being disseminated by others.”

I was just reminded of a case in which Judge Torres ruled against the SEC on a key issue, the SEC appealed, and the appellate court upheld Judge Torres.

SEC v. Rio Tinto.

Just don’t ask how long the whole process took. pic.twitter.com/4EPoU4mnhx

— Jeremy Hogan (@attorneyjeremy1) May 3, 2023

What makes this important is that Judge Torres is also the presiding judge in the Ripple v. SEC case and such a judgment on a previously similar case could also translate to a similar judgment for Ripple. If so, then this is a positive for the company.

What A Victory Would Mean For XRP

The Ripple v. SEC case has dragged on for a couple of years now which has negatively impacted the price of XRP. In 2020 when the bull market was starting to roll around, Ripple was hit with a lawsuit that saw XRP’s price crash over 50%, and while other cryptocurrencies in the space went on to see new all-time highs in the next year, XRP suffered tremendously.

Even now, the token is yet to reach its full potential but a Ripple victory would turn the tide on this. An example of what kind of impact such a victory would have on the price was back in Q1 2023 when CEO Brad Garlinghouse said he expected the case to come to a close in the first half of 2023.

XRP price struggles at $0.46 | Source: XRPUSD on TradingView.com

The price of XRP soared on this news and reached as high as $0.55 before correcting back downwards. However, it worked to show what such news could do to the price. It is entirely possible that a Ripple victory would push the digital asset to a new all-time high.

As for if the SEC would take such a judgment lying down, Hogan responded to a Twitter user that he does not think the SEC would appeal. Furthermore, he cited two other lawyers who are familiar with the case who also believe that the SEC would not appeal if Judge Torres were to rule in favor of Ripple. However, all of this remains to be seen.

At the time of writing, XRP’s price seems to be moving in tandem with the general market trend. It is trading at a price of $0.46, with a minor 0.43% increase on the 7-day chart.

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet… Featured image from PYMNTS, chart from TradingView.com

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