John E. Deaton recently let out a barrage of tweets calling out the companies being litigated by the US Securities and Exchange Commission (SEC) to unite and wage war against the federal regulator. The lawyer and avid supporter of XRP also alleged that SEC is not just attacking the promoter but is attacking the token itself.
Deaton Calls for Unity in Defense of Ripple
Deaton, the founder and managing partner of Deaton Law Firm, urged all XRP holders to help defend Ripple in the case it is currently facing against the SEC in a series of tweets. It should be recalled that the regulator filed a case against the company in 2020 for allegedly conducting unregistered securities offering in connection to the sale of its XRP tokens.
The lawyer also encouraged all companies under fire by SEC, or about to be targeted by the regulator, to “think outside of the box and organize”. He instigated them to hold meetings, share ideas, and develop coordinated strategies together as they are now in a war against the government institution.
According to Deaton, there were initially 12,600 XRP holders who joined the motion to intervene in the Ripple vs. SEC case. Now, the unnamed class plaintiffs are already around 75,000.
A motion to intervene is a legal filing made by a third party called an “intervenor” who seeks to participate in a lawsuit or other legal proceeding that they are not originally a party to. An intervenor has a legal interest in the case wherein he/she is not being adequately represented by the current parties, or he/she may be affected by the outcome of the case in a way that the current parties under litigation are not.
Likewise, the Deaton Law Firm founder promised that he would be happy to help with the cause. He jokingly stated that he is willing to replace Elon Musk as the “SEC’s most hated” along the way.
Ripple Vs. SEC Case
The SEC claims that Ripple raised over $1.3 billion through the sale of XRP tokens to investors back in 2013 to fund its platform. By their nature, the XRP tokens are a security under the Howey Test.
Based on the test, the investors’ control over the profit is a crucial element in determining if an investment contract is a form of security. Since the investors of Ripple had no influence on how the assets were used by the company, it was deemed as a security.
In its defense, Ripple argued that SEC lacked fair notice. The fair notice defense employed by the company is based on the principle that individuals should not be subject to criminal liability for conduct that they could not reasonably have known was prohibited. To satisfy the requirements of the fair notice, a criminal statute or regulation must be drafted in a way that a reasonable person could understand what conduct is prohibited or required, and must not be so vague or broad as to give prosecutors excessive discretion in charging individuals with crimes.
As of March 5, 2023, the Ripple Vs. SEC continues to get hotter as both parties in the case await summary judgment from the US Supreme Court.
Final Thoughts
The Ripple Vs. SEC case has always been a trial by public opinion. Now, more people are weighing in on the case in favor of the XRP issuer. For now, all that they can do is wait for the decision of the highest court, or they can join the cause if they are affected in some way by the pending ruling.
Should Ripple lose the case, fines could rain down on a large number of its crypto projects. Moreover, the jurisprudence may create precedence for all other cases of similar nature filed by the SEC.
Furthermore, the declaration of the affected Ripple projects as securities may eventually take a toll on the valuation of its tokens as negative sentiments are created by the fallout.