How Ripple, XRP Holders, and SEC can all win XRP lawsuit

Rick Steves

In this example, all parties – including XRP Holders – could win the SEC v. Ripple lawsuit.

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The SEC v. Ripple has finally arrived at summary judgment time. Both parties are meeting this week to see if they can agree on a scheduling order.

A recent SEC filing noted that Ripple was pushing for mid-May for initial briefs, but the agency made it clear it wants more time. “I think it’s safe to say early June for initial briefs and Daubert motions”, said XRP Holders’ attorney John Deaton.

Deaton commented on what to expect and potential outcomes, reminding his Twitter followers that Ripple may still lose the XRP lawsuit, but that it is possible that both sides win, technically and legally speaking.

Win-win-win situation

“Ripple and the SEC will agree to a laundry list of agreed upon stipulated indisputable facts. Those stipulated facts can remove the case from being decided by a jury. If the parties can’t agree, a jury decides what actually happened – the jury decides the facts”, John Deaton explained, giving an example. “If the parties in a car accident case don’t agree what color the Traffic light was, the jury decides. But if both parties agree the light was red, there’s no need for a jury to decide that fact.

“Hence, Ripple and the SEC could agree to all of the relevant facts. If that happens, then the Judge applies the law to those set of facts and gives her ruling”.

Deaton provided a hypothetical example, in which the SEC and Ripple agree that in February 2013, Ripple sold an option for 1 billion XRP to Investor B, valued at .05 per XRP, for $25 million dollars.

“J. Torres, applying Howey factors could determine that on that day in 2013 Investor B gave $25M (an investment) into a common enterprise (Ripple) w/ a reasonable expectation of profit b/c Ripple explained all the efforts it intended to make to drive adoption and utility of XRP”.

In the abovementioned example, all parties – including XRP Holders – could win. 

“If the above factual scenario was agreed to, the judge could find that specific offering of XRP, an investment contract with Ripple. SEC wins!

“Ripple could still win because the judge applying those same factors decides ongoing sales of XRP by Ripple are not securities. Ripple wins.

“The judge should find that secondary market sales of XRP independent of Ripple are also not securities. XRPHolders win.”

John Deaton has recently predicted that the XRP lawsuit could end in August as best-case scenario, and a settlement between the SEC and Ripple is increasingly unlikely, but not all jury trials are equal and there is one that probably intimidates the plaintiff.

“SEC doesn’t want a jury trial on the Fair Notice. Also, the court imposes a good faith obligation on the parties. The SEC and Ripple can’t ignore a fact that is not in dispute”, he said as he argued for a win-win-win situation.

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