Deaton expects the SEC appeal decision to take at least two years, and the judge might rule similarly as before.
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Crypto lawyer John Deaton, representing 75,000 XRP holders, stated on July 23 that an SEC appeal may not alter the Ripple ruling’s outcome.
The Ripple ruling has brought both hope and uncertainty to the crypto industry amid the evolving regulatory landscape. The U.S. SEC recently revealed its plan to appeal a portion of the decision, citing it as “wrongly decided.”
The SEC is concerned with the Ripple ruling’s aspect regarding the retail sale of XRP on crypto exchanges. The judge deemed these sales not as securities sales, but the SEC intends to potentially appeal this decision.
Deaton mentioned in a tweet that an SEC appeal could take about two years for a court decision. During this time, Judge Analisa Torres’ Ripple ruling will remain the governing law in the 2nd Circuit.
SEC Appeal Not a Sure Win, Says Deaton
Deaton asserted that Ripple could potentially win in court again if the SEC pursued an appeal. His analysis suggests that even if the 2nd Circuit disagreed with Judge Torres’ application of the third factor of the Howey Test, it doesn’t guarantee victory for the SEC.
The Howey Test’s four factors are: (1) an investment of money, (2) in a common enterprise, (3) the expectation of profit, and (4) derived from the efforts of others. Judge Torres ruled that XRP’s retail sale didn’t meet the third factor because retail investors didn’t have a reasonable expectation of profit tied to Ripple’s success.
Deaton explained that if the 2nd Circuit found Judge Torres’ application of the third prong of the Howey Test to be “wrong,” she would likely assess the remaining two factors. In that scenario, Judge Torres could rule the same way as before, concluding that the SEC did not satisfy the common enterprise factor.
It’s crucial to note that the Torres Decision’s binding scope is limited to the Southern District of New York (SDNY). While a fellow District Judge within the SDNY could potentially disagree, Deaton argues that dissent is less likely within the 2nd Circuit, given her reference to Judge Castel’s ruling in the Telegram case.
Deaton also highlighted the Coinbase transcript as evidence supporting Judge Torres’ perspective. He suggests a consensus trend within the 2nd Circuit, potentially aligning views with the Torres Decision.
SEC Messed Up
Ripple CEO Brad Garlinghouse criticized the SEC for claiming jurisdiction over cryptocurrencies and creating a messy situation in protecting retail investors. He accused the SEC of overstepping its legal boundaries, leaving consumers in a difficult position while prioritizing press conferences over action.
Ripple’s Chief Legal Officer, Stuart Alderoty, tweeted that the SEC claiming jurisdiction over crypto is a “political power play” that harms everyone involved.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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