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By Oct. 7, the chances of appealing the Ripple Labs lawsuit by the U.S. Securities and Exchange Commission (SEC) will go out the window. In line with these, many legal experts, including John Deaton, have shared hot takes on what to expect from the regulator.
SEC appeal not good move
According to Deaton, appealing the secondary part of the ruling might be futile. He voiced his opinion as a legal representative of XRP holders with first-hand knowledge of the case. To him, Judge Analisa Torres was very calculating when she ruled that XRP traded on secondary exchanges does not represent an unregistered security.
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Deaton said if the SEC contests this aspect of the ruling, the appellate court might not rule that Judge Torres erred in applying the third prong of the Howey Test. Per his explanation, Judge Torres did not rely on expert testimony focusing on XRP holders. To Judge Torres, the market regulator did not establish a common enterprise argument needed for the Howey Test to fly.
While Deaton acknowledged that in some other lawsuits, the facts considered in the Ripple v. SEC ruling might wield a different influence, in the Ripple case, the regulator’s omission may be used against it.
He claimed that should the SEC appeal, the appellate court may still send the case back to Judge Torres, who will still rule in favor of Ripple.
US SEC’s lenient leanings
Even though the United States still lacks regulatory uncertainty regarding the crypto ecosystem, there is visible progress. The SEC has recently reversed its use of “crypto asset securities” as a term in legal proceedings.
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The Ripple v. SEC case ended in a split win for both entities. The regulator secured a $125 million fine payment, as ordered by Judge Torres, for Ripple selling XRP to institutional investors.
With election year approaching, it remains to be seen if the SEC will want to paint the current administration in a bad light, given what is at stake.
