Ripple vs. SEC: Deaton says SEC's appeal is likely to be dismissed

The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) continues to attract the attention of investors and cryptocurrency enthusiasts. Recent insights from renowned legal expert John Deaton have shed light on what may happen as the case progresses, especially since the SEC recently appealed to the Second Circuit Court. SEC faces a tough battle with appeals Speaking on the Good Morning Crypto Show, John Deaton emphasized that the SEC's appeal lacks persuasive basis. Despite being dissatisfied with Judge Analisa Torres' 2023 ruling - excluding the sale of XRP to retail investors from the list of unregistered securities - the SEC seems to have very few options to reverse the decision. Deaton pointed out that Judge Torres determined that the SEC had not met important legal criteria. Even if the appellate court takes the case, it is likely to uphold the previous ruling, affirming that Ripple's XRP transactions with retail investors do not violate securities laws. Deaton noted, "If the appellate court rules, it could be beneficial for Ripple". Furthermore, if the SEC wins the lawsuit at the appellate level, the case could be taken to the Supreme Court, potentially leading to prolonged delays. Such a scenario would prolong the uncertainty for both the SEC and Ripple, further complicating the regulatory landscape for cryptocurrencies. The momentum shift is beneficial for Ripple Deaton also highlights the challenges for the SEC in maintaining the lawsuit against Ripple. The lawsuit has garnered overwhelming support from the cryptocurrency community, with over 75,000 XRP holders participating to demonstrate the utility and widespread adoption of the token. Many argue that XRP serves a legitimate purpose, similar to Bitcoin or Ethereum, and should not be subject to the same regulatory scrutiny as traditional securities. Adding to the SEC's difficulties is the internal division of the agency. The current SEC chairman, along with former commissioner Paul Atkins, has publicly criticized the agency's stance on cryptocurrency. Deaton believes that this internal disagreement could be crucial in directing the SEC to completely dismiss the lawsuit. He further explained that a majority vote by three of the five SEC commissioners could lead to the dismissal of the lawsuit. This result not only brings relief to Ripple and XRP holders but also sets an important precedent for the cryptocurrency industry as a whole, providing clarity on regulation. What will Ripple and the SEC do next? On January 15, 2025, the SEC officially submitted its arguments to the Second Circuit Court of Appeals, asserting that the New York District Court was wrong in ruling in favor of Ripple. The main dispute of the SEC lies in Judge Torres' decision regarding the distinction between XRP sales volume to retail investors and institutional investors. However, Ripple still maintains that the utility and decentralized nature of XRP differentiate it from traditional securities. During the appeal process, Ripple continues to expand its operations, focusing on global adoption and partnerships. The company's positive momentum, along with increasing support from the cryptocurrency community, puts additional pressure on the SEC to reconsider its stance. The meaning for the cryptocurrency industry A beneficial solution for Ripple could have far-reaching implications for the cryptocurrency market. It not only affirms the legitimacy of XRP but also creates a precedent that could influence how regulatory bodies approach other digital assets. Currently, all attention is focused on the Court of Appeals and the SEC's next moves. As Deaton predicts, Ripple is in a good position to win, signaling a significant shift in the legal battle between cryptocurrency innovators and traditional regulatory agencies.