Even if the SEC appealed, Ripple could win again, says pro-XRP lawyer John Deaton

Renowned cryptocurrency attorney John Deaton, who represents over 75,000 XRP holders, said: Said On July 23, he said an SEC appeal would not necessarily change the outcome of the Ripple ruling.

In an ever-changing cryptocurrency regulatory landscape, the recent Ripple ruling has brought hope and uncertainty to the cryptocurrency industry. Earlier this week, the U.S. Securities and Exchange Commission (SEC) announced its intention to appeal some of the decisions, calling them “wrong decisions.”

The SEC is angered by part of the Ripple ruling regarding the retail sale of XRP on cryptocurrency exchanges. A judge ruled that retail sales of XRP are not securities sales, but the SEC said it could appeal the ruling.

But Deaton said in a tweet that even if the SEC appealed, it would take about two years for the court to decide. In the meantime, Judge Analisa Torres’ Ripple decision will continue to govern, at least within the Second Circuit.

Deaton says appeal does not guarantee SEC victory

Deaton argued that Ripple could win a second court case if the SEC proceeds with its appeal. According to Deaton’s analysis, even if the Second Circuit potentially disagreed with Judge Torres’ application of the third component of the Howie test, it would not guarantee the SEC’s victory.

The four components of the Howey test include (1) investment of money, (2) investment in general business, (3) expected return, and (4) benefit from the efforts of others. Assets with all four boxes checked are classified as securities and are regulated by federal securities laws.

Judge Torres ruled that XRP’s retail sales did not meet the third factor of the Howie test because retail investors did not have a reasonable expectation of profits from Ripple’s success.

If the Second Circuit finds Judge Torres’ application of the third component of the Howie test “wrong,” Deaton said Judge Torres will likely evaluate the remaining two components of the Howie test. In that case, Judge Torres may “rule in exactly the same way” only after the SEC determines that the corporate common factor has not been met, he added.

It is important to clarify that the Torres decision is not binding beyond the Southern District of New York (SDNY). Fellow district judges in SDNY may disagree with Judge Torres, but Mr. Deaton argues that such an opposition is unlikely in the Second Circuit, especially given his citation of Judge Castel’s decision in the Telegram case.

Deaton also pointed to Coinbase records as evidence that events appear to be consistent with Judge Torres’ views. He suggests that there is already a trend toward consensus within the Second Circuit, and that his views may align with the Torres decision.

SEC caused ‘chaos’

Ripple CEO Brad Garlinghouse Said By claiming jurisdiction over cryptocurrencies, the SEC has caused “confusion” over the protection of retail investors.

“The SEC caused this chaos by declaring themselves the crypto trading police despite having no jurisdiction. Where did that lead us? Consumers were left with bags in bankruptcy court while the SEC held a press conference.”

Ripple Chief Legal Officer Stuart Alderotti tweeted: I got it He said the SEC’s claim to jurisdiction over cryptocurrencies is “just a political power struggle” that “hurts everyone.”