Deaton Highlights Major Difference Between Ripple and LBRY Lawsuits

Attorney Deaton has highlighted the significant difference between the Ripple and LBRY lawsuits.

CryptoLaw founder and pro-XRP attorney John Deaton recently called public attention to the major factors differentiating the Ripple and LBRY lawsuits.

He made this known after a Ripple Engineer pointed out that the build-up to the summary judgment decision in the Ripple lawsuit is similar to the LBRY case.

In a recent Twitter exchange, Neil Hartner, a software engineer at Ripple, recounted how people speculated that the judge delaying the summary judgment decision in the LBRY case would bode well for the defendant.

However, things did not go that way, as LBRY lost the case to the SEC. Furthermore, Hartner said the volume of materials to review is the only factor to consider when discussing ruling timing.

I recall people following the LBRY case thinking the judge was taking a long time and speculating that was a good sign for the defendant. Which was a big nope. Volume of material to review seems like the only thing to read into the timing.

— Neil Hartner (@illneil) June 26, 2023

Deaton Highlights Major Differences in LBRY and Ripple Cases

Meanwhile, Attorney Deaton highlighted key factors differentiating the Ripple and LBRY cases regarding the timing and outcome.

In a tweet today, attorney Deaton asserted that the filings in the Ripple lawsuit are 10X more than LBRY’s. Attorney Deaton also noted that LBRY counsel conceded that the defendants’ sales satisfy the first and second prongs of the Howey test.

The filings in Ripple are 10X the filings in LBRY. Remember also, LBRY’s counsel stipulated that prongs 1 and 2 were satisfied and the only contested prong in the case was prong 3, which has a two-part test (that’s why some people say Howey is a 4 factor test). In Ripple, factor…

— John E Deaton (@JohnEDeaton1) June 26, 2023

For context, the Howey test is a legal test used to determine whether a transaction qualifies as an investment contract. Notably, Howey’s first and second prong entails “an investment of money” and “in a common enterprise,” respectively.

Furthermore, Deaton said LBRY counsel only contested the test’s third prong, which he believes is a two-part test. Notably, the third prong of Howey involves- “the expectation of profit to be derived from the efforts of others.”

According to Deaton, Ripple’s counsel heavily contested prong two of the test- Common enterprise.

“Also, the issue of consumptive intent (not even meeting factor 1 because it’s a non-investment) is in play,” said Deaton.

XRP Community Lament Ruling Delay

The crypto community has continued to lament Judge Analisa Torres’ delay in issuing a final verdict in the SEC vs. Ripple lawsuit. Yesterday, a top XRP community member, Mr. Huber, shared a screenshot indicating that a judge takes one to three months to issue a summary judgment decision.

Fake news!! ? pic.twitter.com/Mvt897otWP

— Mr. Huber??? (@Leerzeit) June 25, 2023

However, former director of SEC’s San Francisco unit Marc Fagel dispelled the information as false. He noted that the information could be from a random FAQ (Frequently Asked Question) from a law firm practicing personal injury law.

Additionally, Fagel said a recent study of federal cases shows that the judge takes about six months to issue a ruling in federal district courts. Meanwhile, the same cannot be said about the Ripple case. Per Fagel, the summary judgment phase in the Ripple case is approaching the seventh month, with no ruling in sight.

For example, the most recent study of federal cases I saw (2018) found that summary judgment motions in this particular federal district court take on average about 6 months (and Ripple is approaching 7 months). https://t.co/I2ntdk5ihh

— Marc Fagel (@Marc_Fagel) June 25, 2023

Interestingly, attorney Deaton joined the conversation. He said if federal courts averaged 1-3 months for summary judgment motions, the U.S. Congress would not have initiated the six months rule.

Deaton’s comment prompted Hartner to ask how long the judge took to issue a summary judgment ruling in the LBRY case.

In response, Fagel said less than four-and-a-half months, as the case has a less voluminous record than Ripple.

Notably, the development comes days after top crypto analyst CryptoBull said the delay in the Ripple case creates a negative perception within the XRP community. CryptoBull said the delay hurts people’s confidence in the U.S. justice system.