The lawyer representing XRP holders sheds light on the SEC’s motivation for dropping charges against Ripple’s executives.
A significant development this week revolves around the United States Securities and Exchange Commission (SEC) discontinuing its legal action against Ripple Labs Inc.’s top executives, Brad Garlinghouse and Chris Larsen. Notably, John Deaton, the attorney representing XRP holders, suggests that the SEC’s decision to back down is primarily due to a recognition that it had slim chances of success in a trial.
John Deaton has been consistently critical of what he perceives as the SEC’s “regulatory overreach” in the crypto space. While the crypto community focuses on the potential settlement of other unresolved aspects of the case, Deaton points out the SEC’s strategic move to avoid further embarrassment if the trial were to proceed as scheduled in April 2024. Deaton emphasizes that the SEC was not prepared to risk having certain individuals as witnesses during the trial. Consequently, rather than viewing the dismissal as an act of courage and patriotism on the SEC’s part, many, including Deaton, believe it could be a tactical maneuver for future actions.
Despite several victories for Ripple Labs, the company remains liable for violating Federal Securities laws in its sales of XRP to institutional investors. The SEC has expressed an interest in restitution, which is anticipated to involve a substantial settlement. While there are speculations that this settlement figure could be as high as $770 million, John Deaton suggests that rigorous negotiations will likely bring this amount down. He cites the LBRY case as an example, where the initial demand was set at $23 million, but the final settlement was reached at $130,000.
Deaton further anticipates that the negotiation process will extend the timeline for any potential SEC appeal, if it occurs at all.