Ripple v. SEC: Deaton says SEC must admit faults for new XRP judgment

After Judge Torres denied the Ripple SEC motion for an indicative ruling, legal experts have shared various perspectives on the next steps in the prolonged legal battle.

Pro-crypto attorney and former senatorial candidate John Deaton also weighed in on the ruling, outlining what both parties need to do before Judge Torres can consider amending her judgment in the XRP lawsuit.

SEC should acknowledge errors and work with Ripple for new judgment

During a live broadcast, John Deaton explained that for a new judgment to be issued in the XRP lawsuit, the SEC must acknowledge its errors and withdraw its previous arguments. He emphasized that the Commission would need to collaborate with Ripple and reference current bills in Congress related to digital assets.

By doing so, the SEC would recognize that crypto assets resemble commodities more than securities and may not fall under its regulatory authority. As reported by CoinGape, Judge Torres denied the SEC’s motion against Ripple, calling it “procedurally improper.” The SEC had requested relief from the injunction and sought to reduce the civil penalty to $50 million.

To win the motion, Deaton thinks the SEC would have to persuade Judge Torres that Ripple’s sales of XRP caused no harm and that the injunction is preventing Ripple from conducting business—specifically from selling XRP to financial institutions. He also observed that the SEC would need to argue that the injunction poses its main harm to an American company and its prospective business partners.

Judge Torres also pointed out that a district court ruling in favor of an indicative ruling motion must determine whether the proposed consent decree is fair and reasonable without risking harm to the public’s interest by including injunctive relief in the decree.

Another legal expert outlines steps and timeline for challenging XRP judgment

Attorney Fred Rispoli echoed Deaton’s sentiment, noting that getting a favorable new judgment to replace the existing judgment in the XRP suit would be an uphill battle. He proposed that both parties should file a 25-page motion listing all of the other cases that both have dismissed.

Rispoli also suggested that the SEC submit declarations from its Commissioners and admit that the Commission has fallen short in its efforts to provide the market with clear guidance on crypto. He assumes the agency will take that approach, but it could be two to three weeks before Ripple and the SEC each complete their arguments and refile the motion. Rispoli then anticipates that Judge Torres will need another one or two weeks to decide.

Following Judge Torres’ latest decision, the price of XRP fell more than 4%. At the time of writing, the altcoin is trading near $2.40, down almost 2% over the past 24 hours.

SEC faces internal backlash over Ripple settlement

Adding to the case’s complexity, internal disagreements have surfaced within the SEC itself. On May 8, the SEC and Ripple jointly filed a settlement letter in a New York court requesting the dissolution of the August 2024 injunction against Ripple and proposing that $75 million of the $125 million in civil penalties held in escrow be returned to the crypto company.

SEC Commissioner Caroline Crenshaw, known for her skeptical stance on crypto, blasted the pending deal in a May 8 statement, saying it would damage the regulators’ ability to keep crypto firms in line and undermine the court’s ruling.

“This settlement, alongside the programmatic disassembly of the SEC’s crypto enforcement program, does a tremendous disservice to the investing public and undermines the court’s role in interpreting our securities laws,” she said.

Her remarks highlight the growing divide within the Commission and raise broader concerns about the SEC’s consistency in addressing the rapidly evolving crypto landscape.

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