In an interesting turn of events, the United States Securities and Exchange Securities (SEC) voluntarily dropped its case against Ripple executives Brad Garlinghouse and Christian Larsen on Thursday, October 19. While this move implies that the trial scheduled for April 2024 will no longer hold, the financial regulator is still pursuing other parts of the case against the payment company.
In the wake of the surprising dismissal, there has been a wide range of reactions from the crypto world, particularly the XRP community. John Deaton, a lawyer and popular XRP supporter, is the latest to offer an insight into the ongoing legal battle between Ripple and the SEC.
Will The SEC Bring An Immediate Appeal Against Ripple?
In a post on the X (formerly Twitter) platform, Deaton shared his opinion on the possibility of an immediate appeal by the SEC. This was in response to crypto trader Ran Neuner’s concerns about the recent dismissal of the case against Garlinghouse and Larsen.
Although Ran is correct that an appeal by the SEC will happen sooner because the SEC chose to dismiss the case against @bgarlinghouse and @chrislarsensf (because the April 2024 trial will now not happen), it is incorrect to say the SEC can appeal immediately.
The penalty phase… https://t.co/kXoHL61yL3
— John E Deaton (@JohnEDeaton1) October 20, 2023
Neuner had earlier implied that the Commission could appeal the Ripple case sooner, having dropped the charges against the Ripple executives. “Previously, they had to wait until the end of the case, but now that they dropped the case – THEY CAN APPEAL IMMEDIATELY,” he added.
In his post, Deaton partially agreed with the crypto trader, saying that a SEC appeal could come sooner because of the dismissal. However, contrary to Neuner’s stance, Deaton believes that the SEC can’t bring an appeal against Ripple immediately.
“The penalty phase of the case must occur first”, the lawyer said, using the judgment decision in LBRY’s trial as a case study. Deaton explained:
The summary judgment decision in @LBRYcom was handed down on November 7, 2022. The final judgment that became appealable was entered on July 11, 2023 – EIGHT MONTHS after the ruling. The appeal was filed September 7, 2023.
Furthermore, Deaton highlighted the amount at stake in each case. In the LBRY case, the SEC initially wanted $23 million in fines but eventually settled with a $130,000 penalty negotiated over eight months.
The Ripple case, on the other hand, involves a more significant $770 million. Deaton contends that negotiation on such a colossal figure will likely take longer than eight months, meaning that an SEC appeal is expected no earlier than 2024.
The SEC Will Not Give Up
In his post, Deaton dispelled the notion that the SEC dropped the charges against the Ripple executives to fast-track an appeal process. The pro-XRP lawyer argued that the SEC dismissed the case because of its low chances of success.
However, it appears the financial regulator will not be going down without a fight in its lawsuit against Ripple. According to Fox Business journalist Eleanor Terret, the SEC will continue to pursue other parts of the case, including the classification of all offers and sales of XRP as an investment scheme.
At the same time, the dismissal of the case against Garlinghouse and Larsen has sparked talks of a potential settlement between the SEC and Ripple.