John Deaton, a lawyer advocating for Ripple, foresees an extended legal battle in the ongoing lawsuit against the United States Securities and Exchange Commission (SEC). The case involving Ripple, its executives Brad Garlinghouse and Chris Larsen, may persist for up to a year, according to Deaton. He suggests that the possibility of a settlement could come into play if Coinbase‘s motion to dismiss the SEC’s case against it succeeds.
The Lack of Serious Settlement Talks
In a comprehensive statement on social media, Deaton pointed out the absence of substantial discussions about a settlement between Ripple, its key figures, and the SEC. He highlighted the SEC’s pursuit of a $770 million penalty and the intricate nature of the penalty phase, which encompasses a multitude of legal processes. Deaton expressed, “I do not believe there has been a single serious conversation regarding a settlement between Ripple, Brad Garlinghouse, Chris Larsen, and the SEC. The SEC is determined and seeks a $770M penalty.”
Complex Penalty Phase and Potential Strategies
Deaton elaborated on the penalty phase, describing it as a detailed process similar to a second legal case. It involves depositions, document requests, emails, financial records, contracts, and transactions related to on-demand liquidity (ODL). Deaton suggests that Ripple might seek to reduce the hefty $770 million penalty by excluding ODL transactions and minimizing additional expenses. He pointed to a precedent in the LBRY case, where the SEC initially sought $23 million but ultimately settled for a $130,000 fine.
As I said on @CryptoLawUS TV yesterday with @attorneyjeremy1 and Thien-Vu, I do not believe there has been a single serious conversation regarding settlement between @Ripple @bgarlinghouse @chrislarsensf and the @SECGov.
The SEC is pissed and embarrassed and wants $770M worth… https://t.co/kcXvsrPgaa
— John E Deaton (@JohnEDeaton1) October 25, 2023
Deaton provided a timeframe, estimating that a final judgment, issued by Judge Torres, may not materialize until late summer at the earliest. He implied that it could take a full year before an appeal is filed in this case.
Coinbase’s Role in Ripple’s Fate
Deaton connected the outcome of Ripple’s case with the SEC’s lawsuit against Coinbase. If Coinbase successfully dismisses the SEC’s claims, the regulatory agency may reconsider its stance on cryptocurrencies and potentially engage in settlement discussions with Ripple. However, if Coinbase’s motion fails, Deaton does not anticipate a settlement.
The oral argument for Coinbase’s motion is scheduled for January 17, 2024, with a decision expected within 60 to 120 days. During this period, Ripple is likely to face substantial legal expenses in its efforts to reduce the $770 million penalty.