Prominent Pro-XRP attorney John E. Deaton has downplayed the potential ramifications of an appeal by the U.S. Securities And Exchange Commission (SEC) in its pending case against Ripple over the sale of the XRP token as an unregistered security.
SEC Pushes Possible Appeal Against Ripple Ruling
On July 13, U.S. Judge Analisa Torres of the U.S. District Court for the Southern District of New York ruled reigned that the programmatic sale of XRP did not violate U.S. securities laws, as the SEC cannot prove that private investors expected profits from this investment based on the “entrepreneurial or managerial efforts of others.”
The decision was based on the Howey test, which states that a contract, transaction or arrangement is an “investment contract” and therefore a security if it is (1) an investment of money, (2) in a common venture, (3) with the expectation of profit (4) to be gained through the efforts of others.
For the first time since the ruling, the SEC hinted on July 21, it could appeal against this verdict in one of its petitions another pending case against Terraform Labs and its co-founder, Do Kwon.
The lawyers for these defendants had earlier archived a motion to dismiss the charges against their clients based on the recent Ripple ruling. However, the SEC responded by saying that the ruling was “misruled” in favor of Ripple, and the commission may soon explore ways to review this ruling.
The submission read:
Contrary to Defendants’ claims, much of the Ripple ruling supports the SEC’s claims in this case and rejects the arguments Defendants put forth here. With respect to the Programmatic and other sales, the SEC respectfully alleges that Ripple is in violation of and adding baseless requirements to Howey and its progeny. With all due respect, those parts of Ripple have been ruled wrong and this court should not follow them. SEC personnel are considering the various avenues available for further review and intend to recommend that the SEC seek such review.
Potential SEC appeal is probably insignificant – John Deaton
Commenting on whether an SEC appeal in its case against Ripple would spell a setback for XRP, popular crypto lawyer and XRP supporter Deaton has issued a positive outlook, suggesting that this was far from the case.
This is evident from a tweet dated July 22, Deaton supported this claim by stating that an appeal by the SEC would first take two years to get a decision from the Second Circuit. In the United States judicial system, the courts of the second circuit represent one of the 13 United States Courts of Appeal.
In addition, the attorney stated that assuming the Second Circuit had determined that the application of the third Howey Factor was wrong, U.S. Judge Torres would still apply the first two Howey Factors and reach the same decision.
the barrel also mentioned that Torres’ decision was clearly not final in New York’s Southern District Court, and there is the possibility that another district judge might have a different conclusion.
However, he said this was unlikely, especially since Judge Torres had made this ruling citing the ruling in the popular SEC v. Telegram case in which the commission won a court order to prevent Telegram from distributing GRAMS tokens on charges of being an unregistered security.
At the time of writing, XRP is trading at $0.7404, up 3.58% on the last day based on data from Tradingview.
XRP trading at $0.7404 on the daily chart | Source: XRPUSD Chart On Tradingview.com
Featured image from Leadership News, chart from Tradingview.