A lawyer has outlined what he believes to be the most likely outcome if the U.S. Securities and Exchange Commission (SEC) wins against Ripple Labs and XRP is declared a security. He expects Ripple to appeal if the SEC wins, warning: “If Ripple loses to the SEC, there won’t be any money collected for years.”
Lawyer Explains Likely Outcome of SEC Lawsuit Over XRP
Lawyer John E. Deaton, founder of Crypto Law and managing partner of Deaton Law Firm, has outlined what he believes would happen if the U.S. Securities and Exchange Commission (SEC) wins its lawsuit against Ripple Labs and XRP is declared a security.
The SEC sued Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen in December 2020 over the $1.3 billion sale of XRP tokens which the regulator claimed are unregistered securities. U.S. District Judge Analisa Torres is overseeing the case. The Ripple team has maintained that XRP is not a security.
“If Ripple loses to the SEC, there won’t be any money collected for years,” Deaton wrote in a lengthy tweet on Thursday. He detailed:
If the SEC wins, Ripple will appeal and the status quo that exists today will continue over the next 2-5 years.
“Assuming the SEC wins, and the civil case lawyers get a win because the judge in California follows Judge Torres’ ruling, Ripple will appeal that case as well and there will be no money for years, if ever,” he warned, emphasizing:
Five years from now, if Ripple loses all the appeals, the SEC would then collect the money (ie $1.3B) — not the civil plaintiffs.
In this situation, the pro-XRP lawyer explained that the securities regulator “would then offer a payback — a fund for XRP holders to sell their XRP (this is what happened in Veritaseum).”
Deaton noted: “If I were the Plaintiff’s attorney in the civil case, I would want the SEC to lose because the SEC winning will gut the damages for the civil case. Ironically, If there was a recovery, XRP holders would get more money from the SEC fund because in the civil case the lawyers will get between 25-35% of the recovery for attorney fees before the costs of the case are deducted from the fund.”
Moreover, he noted: “If the Supreme Court takes it on appeal (which I believe they will if Congress hasn’t acted by then), I believe Ripple hands down wins with this Supreme Court.”
The attorney went on to discuss the consequence of being on the list of 75K XRP holders which he created. “Being on the 75K list is actually a good thing because a massive putative class of XRP holders is easily identifiable,” he described, elaborating:
By joining the class list I put out, NO ONE WAIVED ANYTHING whatsoever by joining the list.
“In fact, if there was ever any money for XRP holders, from the civil case or the SEC case, I’d likely be contacted because you have to give notice of the recovery to XRP holders and I am in possession of a list of 75K,” he opined.
Nonetheless, Deaton insisted, “The reality is I doubt the civil case leads to anything,” emphasizing: “If the SEC wins in the end, it would collect the most money and offer the best option, ironically. Also, if Ripple loses and Congress fixes this regulatory mess during the 5 years of appeals, it all goes away anyway.”
Ripple’s CEO disclosed in May that the legal battle with the SEC has incurred significant costs for the company, amounting to $200 million. He previously explained that the outcome of the SEC lawsuit against Ripple will be “pivotal for the whole industry.”
Who do you think will win the case, SEC or Ripple? Let us know in the comments section below.
https://news.bitcoin.com/lawyer-outlines-what-would-happen-if-sec-wins-lawsuit-against-ripple-over-xrp/
