The recent decision by the US Securities and Exchange Commission to abandon its appeal against Ripple is being seen as the definitive indication that these [XRP] tokens are categorized as digital commodities rather than securities, according to legal expert John Deaton.
Deaton further mentioned that a $125-million ruling against Ripple for the improper sale of XRP still stands, yet the company may have room to negotiate that amount now that the SEC has opted to drop its appeal.
Deaton is widely recognized for his representation of XRP holders, who he argued were not adequately defended in the SEC’s case against Ripple. He later ran for a Senate seat in Massachusetts against Elizabeth Warren, a prominent critic of the cryptocurrency sector.
Related: What’s keeping the Ripple SEC case alive amidst various resolutions?
Will Ripple withdraw its cross-appeal?
An important factor moving forward is Ripple’s cross-appeal, which was submitted in October 2024. Deaton believes the SEC is likely hesitant to allow Ripple to advance its cross-appeal, as a ruling against the commission could undermine its authority and influence other cases.
This situation provides Ripple with leverage during negotiation talks. “The tables have turned,” Deaton stated. “The political landscape has changed, the industry has adapted, and the SEC has made a significant shift in its stance towards the industry. Why should we owe $125 million?”
Nonetheless, the matter of the injunction issued by Judge Analisa Torres remains, which bars Ripple from selling XRP to institutional investors to avoid breaching securities regulations.
“If Ripple genuinely aims to distribute XRP to banks directly in the United States, I believe the key concern is how to navigate around that injunction,” Deaton observed.
Related: XRP’s position in the US Digital Asset Stockpile raises questions about token utility — Is it justified?
The Ripple case was an assault on the industry
“I recall when this case was initially filed,” Deaton reflected, stating:
“I regarded it as an attack on the industry, akin to having a boot on its neck, and I was convinced it wouldn’t be a one-time occurrence; it was more about sending a message that traditional finance, the banking sector, and individuals like Elizabeth Warren and Gary Gensler were poised against the industry.”
He also emphasized that Ripple can argue that it has remained in the US even after the SEC initiated its case and that it is a company founded in America.
“I believe it’s relevant for Brad Garlinghouse to assert, ‘Look, we’ve been sued by the US government and the Biden administration; we are an American-made firm, and we’ve never abandoned the country.’ I think this perspective serves them well.”
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