Former SEC executive John Stark said the day after the Ripple victory, the case could be appealed and overturned. Recent developments show that the authorities are taking steps in this direction. Crypto lawyer and XRP advocate John Deaton explains what would happen in such a situation…
Attorney John Deaton maps out a new SEC-Ripple case
Former SEC executive John Stark stated in a LinkedIn post on July 14 that the favorable Ripple lawsuit decision will likely be overturned. Stark says the verdict is on “shaky ground.” He also mentions that the court decision affects individual and institutional investors differently.
Some thoughts on the SEC/Ripple decision. https://t.co/A94kHlGI9N pic.twitter.com/lcwWML49kO
— John Reed Stark (@JohnReedStark) July 14, 2023
In a heated development, SEC attorneys filed an appeal with Judge Jed Rakoff of the U.S. District Court for the Southern District of New York. SEC lawyers say that the decision in favor of Ripple was a mistake. The application states, “These parts of Ripple have been misjudged. The court should not follow them.”
XRP advocate John Deaton, on the other hand, believes that the SEC will not gain much with this move…
Most likely: Re-examination process
To John Deaton, if the SEC chooses to appeal the decision, it will at best initiate a “review” process.
Deaton shared his comment with his Twitter followers, citing Footnote 13 in the decision. The footnote states that the court’s designation of joint business for XRP sales only applies to institutional investors. It also details how it acknowledges that the definition expansion does not apply to XRP sales in secondary markets.
READ FOOTNOTE 13 PEOPLE:
“The Court holds only that a common enterprise existed between Ripple and the Institutional Buyers. The Court does not reach the question of whether the common enterprise extends to encompass "other XP holders." Defendants Garlinghouse and Larsen, the… https://t.co/uQO0q4M6sT pic.twitter.com/VwX4jyChSf
— John E Deaton (@JohnEDeaton1) July 22, 2023
In the case of a successful appeal, Deaton said, “Judge Torres will likely conclude that the SEC failed to prove the co-operation factor between Ripple and XRP holders in the secondary market.”
In summary, Deaton wasn’t quite convinced that the market regulator had a chance to appeal. Along with other top experts in the industry, he predicts that the XRP decision will more or less change the game in the case.
Ripple CEO says appeal will take years
Ripple CEO Brad Garlinghouse also recently clarified the allegations. In an interview with Bloomberg on July 15, he stated that even if he objects, the case will take years.
The Ripple-SEC lawsuit is arguably one of the most important lawsuits in the industry today. The final result solidified the defenses of most firms, including Coinbase and Binance, which are currently suing the SEC. He is also already reflecting on the decision to dismiss his pending lawsuit at Terraform Labs. This models how many firms will leverage the XRP decision to strengthen their defenses in case of subsequent pressure by the SEC.
On the Terra side, Coinbase’s Chief Legal Officer Paul Grewal became aware of the SEC court filings in the Do Kwon case. Grewal said the Commission failed to identify any instances where the level of the Howey Test varied based on the nature of the investors in question.
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