Attorney Deaton slams SEC for advising Ripple to sell XRP while alleging the company violated securities law.
Attorney John Deaton, the Managing Partner of the Deaton Law Firm, has slammed the US SEC for its hypocritical behavior.
In a tweet yesterday, attorney Deaton cited a scenario in the Ripple case that showcases the SEC’s hypocrisy. According to Deaton, after Ripple objected to how expensive the SEC discovery requests were, the regulatory agency urged the blockchain company to sell more XRP in order to raise funds.
“Hey, judge, Ripple can afford to do what we ask because all they need to do is violate securities laws some more and sell unregistered securities to the public,” Deaton noted.
Locking Ripple’s escrow forever will never happen. The SEC didn’t seek a preliminary injunction. The SEC seeks $1.3B and a permanent injunction from Ripple and its executives from violating Section 5 in the future. Ironically, during the case, when Ripple objected to how… https://t.co/qldCwg31Sz
— John E Deaton (@JohnEDeaton1) July 10, 2023
Judge Calls SEC Hypocrites
In addition, Deaton said no wonder one of the judges presiding over the Ripple lawsuit called the SEC hypocrites. Last year, Judge Sarah Netburn accused the SEC of hypocrisy based on its litigation tactics in the Ripple case.
The judge commented while ruling against a motion by the SEC to keep Hinman’s emails. Judge Netburn slammed the SEC for adopting “litigation positions to further its desired goal and not out of faithful allegiance to the law.”
Deaton Says Judge Torres Won’t Lock Ripple’s Escrow
Meanwhile, attorney Deaton reacted to a recent comment by an XRP enthusiast. In his so-called “dream ruling,” the user wished for Judge Analisa Torres to lock Ripple’s XRP escrow accounts forever.
The XRP enthusiast added that Judge Torres should levy a fine against Ripple for initially selling XRP as an unregistered security.
As reported by The Crypto Basic yesterday, former SEC division director Marc Fagel considered the speculation “reasonable.” Interestingly, attorney Deaton does not think so, asserting that the judge will never lock Ripple’s escrow.
Per Deaton, the SEC seeks $1.3 billion and a permanent injunction against Ripple and its executives to stop them from violating Section 5 of the Securities Act in the future.
Ironically, the SEC still encouraged Ripple to sell more XRP to raise funds for its case after the company objected to how expensive the agency’s discovery requests were.
“During the case, when Ripple objected to how expensive the SEC’s discovery requests were, the SEC argued Ripple could sell XRP to raise funds.” Deaton Said.
Possible Scenario If Ripple Loses
Meanwhile, attorney Deaton stated that if Ripple loses at summary judgment against the SEC, there could be a penalty phase.
In this phase, Deaton explains that Judge Torres will fine Ripple or disgorge the company from any profits. Consequently, Ripple will appeal the ruling, thus operating the same way it has for the past three years.
Deaton hinted at the possibility of Congress weighing in during the appeal and enacting clarity for the industry. Per Deaton, this will render Judge Torres’ summary judgment moot.
He added that Ripple could win on appeal if Congress does not enact clarity for crypto.
“The escrow, IMO, remains intact, absent a settlement after Judge Torres issues her ruling,” Deaton added.
It is worth noting that Judge Torres has still not issued a decision, thus leading to growing frustration within the XRP community.
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