SEC Lawyers Received No Lesson From Ripple Case, Says Deaton

In a recent development in the Ripplecase, the prominent pro-XRP attorney John Deaton slammed the US Securities and Exchange Commission (SEC) for its inconsistency. The lawyer stated that the agency has been constantly twisting its arguments and changing from its initial claims.

Also, Deaton called out SEC lawyers, saying they've learned nothing from the Ripple case. Deaton's August 21 outburst against the regulator came in response to Gemini's filed motion to dismiss the SEC's lawsuit against it.

Deaton Slammed On The SEC

In the August 21 tweet, Deaton stressed that the SEC needed lessons from its case with blockchain company Ripple Labs.

SEC Lawyers like Jorge Tenreiro and @SECEnfDirector have learned NOTHING from the @Ripple case. Their arrogance is mind blowing.

In the Gemini Reply, @cameron & @tyler state:

the fact that the SEC cannot
decide what is the security at issue only underscores the weakness of... https://t.co/uszdpDpzBC

- John E Deaton (@JohnEDeaton1) August 21, 2023

Notably, Gemini had filed a motion for a federal judge to dismiss the SEC lawsuit against it. The US-based crypto exchange stated that the SEC lacked concrete evidence to prove that it offered unregistered securities on its platform.

Commenting on the development, Deaton quoted a portion of Gemini's motion, noting that the SEC's inability to provide evidence weakens its claims against the exchange. According to the lawyer, the regulator's conduct violates fundamental fairness and the requirement of fair notice."

Deaton stated that the SEC is inconsistent, often suddenly twisting its previous accusations to establish a new line of arguments. He noted that such an approach underscores the agency's inefficiency in tackling crypto cases.

Deaton Recounted SEC's Twists In Arguments

Further, the XRP attorney said the SEC needed to be more straightforward during its legal battle with Ripple Labs. He recalled that the agency was translational and would suddenly twist its theory from the previous positions.

Also, the lawyer stated that the SEC was slippery in its common enterprise argument. Initially, the regulator claimed that Ripple was a common enterprise but later deserted its line of argument when Ripple presented a convincing defense. Ripple convinced the court that it pays no interest to XRP holders.

The Commission later shifted its position, labeling the XRP ecosystem a common enterprise. However, Deaton explained that the entire XRP ecosystem comprises all XRP holders across the globe, including crypto exchanges that support XRP and all businesses and entities that use tokens.

Surprisingly, the SEC also moved its position to claim that the token (XRP) itself constitutes the common enterprise.

Additionally, Deaton mentioned that the SEC shifted its position during the argument about the Hinman document. According to Deaton, the agency first claimed that the speech was William Hinman's opinion and should not form a guide to the open market.

However, the SEC twisted its position following Judge Sarah Netburn's order for the agency to submit the speech documents.

Over 18 months and 6 court orders later, we finally have the Hinman docs (internal SEC emails and drafts of his infamous 2018 speech). While they remain confidential for now (at the SEC's insistence), I can say that it was well worth the fight to get them.

- Stuart Alderoty (@s_alderoty) October 20, 2022

Currently, the SEC is saying that Hinman was the Commission's director of Corporation Finance during his speech. So, the remark came as a guide and opinion of the Corporation Finance division of the agency.

According to Deaton, the SEC's constant shifts in the Ripple lawsuit made a federal judge criticize its lawyers. Furthermore, the judge called them hypocrites, stating they lacked faithful allegiance to the law.

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