Deaton Describes Naming Ripple Executives in Lawsuit as a ‘Major Mistake’ From SEC

The attorney believes the regulator placed an unnecessary legal burden on itself by naming the Ripple executives in the case.

Attorney John E. Deaton has expressed that the United States Securities and Exchange Commission made a “major mistake” in naming Ripple executives Brad Garlinghouse and Chris Larsen in its enforcement action against Ripple Labs.

The CryptoLaw founder expressed this view in a lengthy Twitter thread yesterday as he attempted to explain the possible reason why Judge Analisa Torres’ overruled the SEC’s objections to Ripple expert testimonies on the non-securities treatment of XRP by other agencies. He noted that these testimonies spoke to whether Ripple executives were reckless not to know that XRP was a security. As formerly highlighted by the attorney, the SEC will need to prove this for the court to find the executives guilty of aiding and abetting the sale of an unregistered security.

Pointing out various times that several other government agencies had treated XRP as a non-security, including statements from the SEC, the attorney expressed the view that the agency had shackled itself with an unnecessary burden. Deaton speculates that the regulator may have taken this step to force a settlement or lessen Ripple’s support within the nascent market. However, in his view, this was a major mistake, and the regulator will likely lose on this count.

“It was a major mistake,” Deaton wrote. “In sum, the SEC loses this count.”

The lawyer, in a recent interview on FOX’s CLAMAN COUNTDOWN, maintained that he expects the SEC to lose the case but, at the same time, does not expect Ripple to get an outright victory. Deaton likely made this claim based on personal analysis, which concludes that Ripple sold XRP as an unregistered security from 2013 to 2017. 

The attorney representing 75,000 XRP holders as a friend of the court in the case has predicted that the final ruling in the legal battle is near.