Attorney John Deaton has been making waves in the Ripple vs. SEC legal saga by representing XRP holders and making a compelling case that the anticipated $770 million disgorgement for Ripple is highly unlikely. Deaton has identified several influential factors that could sway the court’s judgment in Ripple’s favor.
One of the key factors that Deaton has highlighted is the Supreme Court’s Morrison ruling, which effectively limits the SEC’s jurisdiction to sales within the United States. This becomes significant as Ripple’s XRP sales in the United Kingdom, Japan, Switzerland, and other regions are under scrutiny. The legal status of XRP in these jurisdictions further reinforces Ripple’s position and weakens the SEC’s case.
For instance, regulatory bodies like the Financial Conduct Authority (FCA) in the U.K. and the Financial Services Agency (FSA) in Japan have not classified XRP as a security. This classification is crucial as it allows for the lawful continuation of XRP sales in these regions, presenting a challenge to the SEC’s pursuit of disgorgement from these global transactions.
Additionally, Deaton emphasizes that the legal action against Ripple is not based on fraud but is rather a regulatory dispute. This distinction is important as it shifts the focus from punitive measures to regulatory compliance. Since a significant portion of XRP sales occurs outside the U.S. and involves accredited investors, the potential for disgorgement is significantly reduced. By excluding non-U.S. sales, which may account for over 90% of total sales, and sales to accredited investors, Deaton estimates a substantial reduction in the potential disgorgement amount.
Moreover, Deaton argues that most institutional XRP sales have not resulted in harm, as the current XRP price exceeds the levels during those sales, indicating a lack of investor losses. He also points out the rapid nature of On-Demand Liquidity (ODL) transactions with XRP, which occur within seconds, reducing the potential for investor harm.
Interestingly, the accusations of harm are more directed at the SEC than Ripple, particularly among the 75,000 XRP holders participating in the legal action.
Another important aspect highlighted by Deaton is the Supreme Court’s ruling that disgorgement is not punitive in nature and cannot exceed “net profits” from the sales. Furthermore, a company can deduct legitimate business expenses from the disgorged amount. This legal nuance could significantly reduce the potential disgorgement amount that Ripple may have to pay.
Deaton’s assertions have sparked discussions and debates within the crypto community, with many speculating on the implications of his arguments for the Ripple vs. SEC case. If his predictions hold true, Ripple may be looking at a much lower disgorgement amount than initially expected.
It’s important to note that Deaton’s representation of XRP holders in the legal battle demonstrates the growing involvement of stakeholders in cryptocurrency-related disputes. The outcome of the Ripple vs. SEC case could set a precedent for future regulatory actions and legal disputes involving digital assets, further shaping the evolving landscape of the crypto market.
In conclusion, John Deaton’s legal arguments on behalf of XRP holders have opened up new avenues for challenging the SEC’s pursuit of disgorgement against Ripple. By highlighting various influential factors and legal nuances, Deaton has made a strong case for a significant reduction in the anticipated disgorgement amount. As the legal saga continues to unfold, the crypto community eagerly awaits the court’s judgment and the potential impact it may have on the broader regulatory framework governing digital assets.