Attorney John Deaton Says Next Ruling Is a Major Determinant In SEC v. Ripple Lawsuit

According to Attorney John Deaton, the next ruling would be a significant one for the SEC v. Ripple Lawsuit.

Following the unsealing of two memos that could see the SEC lawsuit against blockchain company Ripple (XRP) dismissed in the coming weeks, new developments have surfaced. 

The developments prompted attorney John Deaton, the lawyer representing over 65,000 XRP holders, to note that the next ruling will determine the outcome of the case. 

Judge Netburn’s decision on the motion for reconsideration will be the biggest decision in the @Ripple case. I say that b/c I don’t believe the motion to strike the FND is a significant one b/c the Judge isn’t deciding w/r Ripple had fair notice, but only w/r it can argue it.

— John E Deaton (@JohnEDeaton1) February 20, 2022

In a previous ruling on the deliberative process privilege (DPP) made by Judge Sarah Netburn, speech, notes, and drafts from William Hinman, the former director of the Division of Corporate Finance, were found not to be privileged. 

Based on this, the SEC was ordered to make available a few notes, including a draft speech delivered by Hinman on June 14, 2018. 

SEC Kicks Against the Ruling

Uncomfortable with Judge Netburn’s ruling, the SEC filed a counter-motion asking the court to reconsider, as the agency argued that Hinman’s draft is only a personal opinion and not public guidance.  

The Securities and Exchange Commission added that the document is protected by the DPP and should not go public. 

Attorney Deaton’s Position on the Case

With the SEC’s new motion filing, attorney Deaton has commented on the upcoming ruling and how significant it will be for the outcome of the lawsuit. 

Commenting on the upcoming ruling, attorney Deaton said Judge Netburn’s decision on the SEC motion for reconsideration would be the most significant decision in the lawsuit, adding that: 

“I don’t believe the motion to strike a Fair Notice Defense is a significant one because the Judge isn’t deciding whether Ripple had fair notice, but only whether it can argue it.” 

The reconsideration motion contained 63 emails involving Hinman’s speech where he noted that Ethereum (ETH) was no longer a security, Deaton said. 

According to Deaton, it is expected that during the 63 messages, someone must have mentioned XRP at the time, considering the fact that the cryptocurrency was a major contender to become the second-largest cryptocurrency by market capitalization. 

It is worth noting that six months before Hinman’s speech, XRP had surged to an all-time high of $3, usurping Ethereum to become the second-largest cryptocurrency by market cap, so there is a huge chance someone in the email chain asked “what about XRP,” Deaton added. 

Attorney Deaton stated that the evidence is exculpatory once it is discovered that XRP was mentioned in the document. 

If Judge Netburn insists that the SEC must present the documents, it will be huge for Ripple. 

Furthermore, should the SEC persuade the Judge that the document is protected by the DPP, the magistrate can still look for other ways to pierce the privilege. 

However, should Judge Netburn make a 180 degree on her ruling and ask the SEC not to bring forward Hinman’s speech, and she refuses to pierce the privilege, Deaton noted that the email may not be as big as the Ripple community believes. 

Commenting on the Two legal Memos that were Unsealed last week, Brad Garlinghouse Ripple CEO said that truth is out there for everyone.

The truth is out for everyone to read. What we see is that the SEC waited 8 years to decide they disagreed with this analysis, decimating thousands and thousands of XRP holders (who they purport to protect) in the process. So much for being mission-driven… https://t.co/VjGeyMxDy2

— Brad Garlinghouse (@bgarlinghouse) February 19, 2022