- John Deaton challenged SEC’s overreach, advocating for XRP holders and pushing for fair crypto oversight.
- SEC’s Ripple appeal centers on XRP’s classification, impacting the crypto market and regulatory approaches.
- Paul Atkins, pro-crypto SEC Chair, could dismiss the Ripple case appeal, signaling a regulatory shift under Trump’s administration.
The ongoing legal dispute between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs is approaching an important point as the SEC prepares to submit its final appeal brief. The case outcome, which centers on the classification of Ripple’s digital asset XRP, can have major implications on the crypto market.
Deaton On SEC’s Broad Allegations
John Deaton, a vocal advocate for XRP holders, says he filed a 98-page Petition for Writ of Mandamus four years ago, shortly after the SEC initiated its complaint against Ripple. Deaton noted that he argued the SEC’s allegations were excessively broad, effectively targeting every XRP holder globally without naming them as defendants.
He contended that the SEC’s approach implicated users and investors unrelated to Ripple or its executives, including CEO Brad Garlinghouse and Executive Chairman Chris Larsen. Deaton maintained that the SEC’s claims lacked validity and posed harm to the broader XRP community.
SEC’s Response and Jurisdictional Disputes
In response to Deaton’s petition, the SEC stated that it was up to the federal court to assess the legitimacy of its claims. The SEC defended its position that XRP holders were part of a common enterprise with Ripple, regardless of their awareness of the company.
Additionally, the SEC argued that the federal court in Rhode Island lacked jurisdiction, asserting that the Southern District of New York (SDNY) held exclusive authority over the case. Interpreting this as an invitation to join the Ripple litigation in the SDNY, Deaton dismissed his Writ of Mandamus and filed a Motion to Intervene.
Leadership Changes at SEC
Leadership changes at the SEC adds to the uncertainty. SEC Chair Gary Gensler is expected to step down shortly after the SEC’s appeal deadline.
Paul Atkins, the incoming SEC Chair, is anticipated to adopt a pro crypto stance aligned with President elect Donald Trump’s vision. Analysts and legal experts are optimistic that Atkins may seek to dismiss or withdraw the SEC’s appeal, potentially reshaping regulatory oversight of digital assets.
On December 5, 2024, John Deaton outlined his expectations for Chair Atkins, emphasizing the need to overhaul the SEC’s approach to crypto regulation. Deaton called for the dismissal of individuals involved in the Debt Box case, the removal of appointees loyal to Gensler, and the disbanding of the SEC’s Crypto unit.
He advocated for a unified fraud unit to handle all types of financial misconduct, showing his vision for a more streamlined and fair regulatory approach. The outcome of the SEC’s appeal and the transition in leadership will likely have effects on the future of crypto regulation in the United States.
