Renowned pro-Ripple lawyer John Deaton has weighed in on the complex dynamics surrounding the XRP lawsuit and the potential for an expeditious appeal by the U.S. Securities and Exchange Commission (SEC).
Deaton’s insights followed the SEC’s decision to voluntarily drop charges against Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen earlier this week, a move that sparked speculation about the regulator’s next legal steps.
Responding to a tweet by prominent crypto podcaster Ran Neuner, who suggested that the SEC’s dismissal of charges against Ripple’s top executives might lead to an immediate appeal, Deaton made it clear that any notion of an immediate SEC appeal is, in fact, far from reality.
“It is incorrect to say the SEC can appeal immediately. The penalty phase of the case must occur first,” Deaton said on Saturday.
To support his argument, Deaton referred to the LBRY lawsuit, where a summary judgment decision was rendered in November 2022. However, it took eight months for the judgment to become appealable, and the actual appeal was filed in September 2023. Meanwhile, during the 8 months, major discoveries were made, followed by written briefs and oral arguments. Interestingly, in the LBRY case, the SEC initially sought $23 million in fines but ultimately settled for a considerably smaller sum of $130,000.
Deaton then critically compared the LBRY case and the XRP lawsuit, where the SEC is pursuing an unprecedented $770 million. Ripple, in response, intends to argue that certain transactions should be exempt from penalties and that legitimate business expenses, such as salaries, advertising, travel, and insurance, should be factored into the fine calculation. In contrast, the SEC seeks to recover the entire $770 million, including the charges it had to dismiss against the Ripple executives.
Deaton further debunked that the SEC’s dismissal of the case was intended to expedite the appeal process. Instead, he attributed the dismissal to the SEC’s belief in its slim chances of winning the case while also acknowledging the potential for compelling testimonies from multiple witnesses.
That said, the XRP lawsuit continues to captivate the attention of the cryptocurrency community. With the trial scheduled for April 2024 now in doubt, observers remain on edge as they await further developments. The SEC’s subsequent legal manoeuvres will undoubtedly be under intense scrutiny as the Ripple legal saga unfolds.