Attorney Deaton expressed confidence that Ripple will be victorious against the SEC’s appeal, adding that he is willing to place a significant bet.
In a recent tweet, Attorney John Deaton, the Managing Partner of the Deaton Law Firm, said he is willing to bet big on Ripple winning the SEC’s appeal.
The pro-XRP lawyer referenced a detailed thread by top Australian lawyer Bill Morgan.
Judge Torres Didn’t Err in Ripple Ruling
In the thread, Attorney Morgan said he could not see how Judge Analisa Torres erred in her summary judgment decision.
The more I read the Torres decision the more I struggle to see the error. The source of the error cannot be the different treatment of the 3 categories of sales. As Torres J. noted it was the SEC who categorised these three types of sales./1 pic.twitter.com/cchLpSt1y2
— bill morgan (@Belisarius2020) August 6, 2023
According to Morgan, the SEC categorized Ripple’s XRP sales into three different categories- programmatic sales, institutional sales, and other XRP distributions- and the judge analyzed each by applying the Howey test.
Following the analysis, the judge found major differences in each category. For instance, the judge found that institutional investors signed contracts with Ripple and expected to make profits from the company’s efforts.
However, programmatic sales on exchanges did not involve signing contracts, and buyers did not expect to make gains directly from Ripple’s efforts.
Consequently, Judge Torres found Ripple’s XRP sales to institutional investors as securities and ruled that programmatic sales on digital exchanges are not.
Deaton Wants to Bet On Ripple Victory
Reacting, Attorney Deaton commended Morgan for explaining that Judge Torres did not distinguish between Ripple’s XRP sales out of “thin air.”
According to Deaton, the judge took each sale the SEC alleges as securities and applied the Howey test.
To express his confidence in the ruling, Deaton said he is willing to bet significant funds that Judge Torres would not be reversed on appeal.
Excellent 🧵 explaining that Torres didn’t make a distinction between the different sales out of thin air. She took each type of sale CHOSEN and DEFINED by the SEC and applied the Howey test. I’m willing to bet significant funds she doesn’t get reversed on appeal. https://t.co/5jAfwusrng
— John E Deaton (@JohnEDeaton1) August 6, 2023
Reactions Trail Judge Torres’ Decision
It is worth noting that Judge Torres’ ruling, especially her distinction of Ripple’s sales, has been stirring mixed reactions. While some commend her for appropriately applying the Howey test to the SEC’s claim, others state that she erred in her ruling by distinguishing between XRP sales.
As reported by Crypto Basic, US District Judge Jed Rakoff, presiding over the SEC v. Terraform Labs lawsuit, declined to follow Judge Torres’ reasoning. Judge Rakoff noted that the Howey test does not distinguish between buyers.
His comments fueled speculations that the decision would not stand once it gets to appeal. Meanwhile, the SEC has been signaling plans to appeal Judge Torres’ decision.
Deaton Speculates Court Will Issue Same Verdict
However, Deaton is confident that Ripple will still emerge victorious against the SEC’s appeal. Per Deaton, even if the Second Circuit rules that Judge Torres erred in applying the Howey test’s third factor, the higher court will only remand the case.
In this scenario, Deaton speculates that Judge Torres will apply the test’s second prong (common enterprise) to the different sales.
Deaton asserted that the regulatory agency did not satisfy the second prong of Howey in the case. Thus, he speculated that Judge Torres would still issue a similar verdict.