Deaton reveals why he sued the SEC.
Attorney John Deaton, the founder of Crypto Law, has disclosed the major fear that prompted him to file a suit against the Securities and Exchange Commission (SEC).
According to Deaton, in a scenario where the Judge in charge of the ongoing lawsuit between the SEC and Ripple rules on the Fair Notice Defense after declaring XRP security, XRP holders will become the victim. He added that he was forced to sue the SEC based on such a scenario.
“Most likely now, it won’t happen but there was a scenario where the SEC wins but Ripple doesn’t have to pay much. The judge could say XRP was and is a security but Ripple didn’t get fair notice so doesn’t have to pay. XRP Holders get screwed. That fear was one reason I sued the SEC,” Deaton said.
Most likely now, it won’t happen but there was a scenario where the SEC wins but Ripple doesn’t have to pay much. The judge could say XRP was and is a security but Ripple didn’t get fair notice so doesn’t have to pay. #XRPHolders get screwed. That fear was one reason I sued SEC.
— John E Deaton (219K Followers Beware Imposters) (@JohnEDeaton1) October 14, 2022
The Crypto Law founder added that the Fair Notice Defense would act as an insurance policy for Ripple in such a scenario. The move will come into play if the blockchain company loses “the security” litigation.
Deaton said if the court declares XRP security and rules that Ripple did not get Fair Notice, no United States-based exchange will re-list the cryptocurrency. He fears that if such an unfortunate event happens, U.S.-based XRP holders will use alternative means to sell the token.
“First, I’m not saying it is going to happen – I don’t believe it will – I predict it won’t. But in that scenario, you would have a token deemed a security with Ripple but gives you zero rights or interest in Ripple. No exchange would relist, have to be a dealer broker to sell, etc,” he added.
Deaton Fighting to Protect XRP Holders’ Interest
It is worth mentioning that Deaton has engaged the SEC in a legal battle to protect the interest of XRP holders in the Ripple litigation.
In a tweet made in August, Deaton claimed XRP holders lost $15 billion because the SEC decided to brand all XRP, including secondary market sales, as securities instead of limiting the charges to Ripple. This resulted in many U.S.-based cryptocurrency exchanges, including Coinbase and Kraken, delisting XRP, putting pressure on the token’s price.