Just when we thought the SEC vs Ripple case was drawing closer to a conclusion, John Deaton, a pro-XRP lawyer and founder of CryptoLawUS, has given us new perspectives that indicate the road ahead is even more uncertain than anticipated. The SEC’s bold stance and Ripple’s planned counterattacks are muddying the waters further. Here’s a deep dive into Deaton’s insights…
The SEC’s Vengeance: More than Just a Legal Battle
According to John Deaton, the SEC is “pissed and embarrassed,” it’s now out for what he refers to as “$770M worth of flesh.” It’s not just about determining whether XRP is a security; the SEC wants to make an example out of Ripple. Deaton reveals that the penalty phase is like a “second case” involving more depositions, interrogatories, requests for document production, and more.
Deaton believes Ripple aims to slash the SEC’s proposed penalty of $770M drastically. To this end, they are keen to exclude ODL transactions and scrutinize salaries, expenses, and costs. Drawing parallels with the SEC’s case against LBRY, where the SEC sought $23M but ultimately settled for a $130K fine, Deaton suggests that Ripple could have a fighting chance to reduce this astronomical figure significantly.
He marks January 17, 2024, as a critical date—the day of the oral argument on the Coinbase motion. Should Coinbase win, Deaton predicts that the SEC might have to reconsider its strategy, possibly paving the way for a settlement with Ripple. Conversely, if Coinbase loses, don’t hold your breath for an agreement between Ripple and the SEC.
Deaton emphasizes the conflicting signals that federal agencies have given concerning XRP’s status. From meetings between Chris Larsen and financial agencies in 2013 to the FinCEN and DOJ settling with Ripple in 2015, declaring XRP as a “convertible virtual currency,” there’s ample evidence to suggest that the classification of XRP has been anything but clear-cut. Deaton suspects this could play in Ripple’s favor as the case proceeds.
The Timeline: Why a Quick Settlement is Off the Table
Finally, Deaton posits that a final judgment from Judge Torres is unlikely to occur before late summer at the earliest. He further warns that it might take a full year before an appeal is filed in this case. In the meantime, Ripple could spend tens of millions of dollars in legal fees.
