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In light of ongoing discussions about a possible agreement between Ripple and the United States Securities and Exchange Commission (SEC), pro-XRP attorney John Deaton, who represents a number of XRP (XRP) tokenholders, has detailed the potential actions the two entities might consider if they choose to settle.
Deaton emphasized the importance of the current Coinbase vs. SEC lawsuit. He noted that if the judge presiding over the Coinbase case approves the exchange’s motion to dismiss, it would suggest that token sales conducted on the platform are not governed by U.S. securities regulations. However, this would not extend to crypto staking.
He elaborated:
“The only way Ripple and the SEC (could) settle before the end of the year is if Judge Failla grants the Coinbase motion to dismiss or partially grants it – determining that token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws”
If the motion to dismiss is accepted, the SEC’s capacity to file an appeal would be significantly limited, making a settlement a reasonable choice. Deaton clarified that even if an appeal were feasible in such circumstances, the agency’s power would be reduced.
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The only way @Ripple and the @SECGov settle before the end of the year is if Judge Failla grants the @coinbase MTD (or partially grants it – finding token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws but allows the staking component… https://t.co/0KzGT1l0OI
— John E Deaton (@JohnEDeaton1) September 2, 2023
In a filing dated September 1, Ripple stated that the summary judgment did not tackle the legal grounds for the interlocutory appeal. Its opposition was based on the assertion that the agency had deviated from the recognized legal framework, particularly concerning the application of the Howey test to XRP token sales.
The SEC filed a lawsuit against Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen in December 2020, prompting several exchanges to delist XRP to mitigate potential legal risks. However, following a favorable ruling by Judge Analisa Torres in July, numerous exchanges expressed their plans to relist the token.
Related: Ripple legal team opposes SEC appeal over XRP decision
In 2023, the SEC has targeted various cryptocurrency companies over allegations of securities infractions, including Binance and Coinbase. On August 29, asset manager Grayscale achieved a legal victory against the SEC through an appeal that required a reassessment of its application for a spot Bitcoin exchange-traded fund.
Magazine: Get your money back: The weird world of crypto litigation
