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Crypto Legal Expert Tells Coinbase To Dismiss SEC Claims — Follow Ripple’s Lead

Last Updated September 6, 2023 8:59 AM
Omar Elorfaly
Last Updated September 6, 2023 8:59 AM

[/focus-text-wrap]Key Takeaways[/focus-text-wrap]

  • Crypto legal expert says Coinbase should pursue a Motion To Dismiss.
  • Deaton believes a Coinbase case dismissal would eliminate chances for an appeal in Ripple’s case.
  • Deaton says there’s no cooperation with “a bad faith regulator like Gary Gensler.”

Crypto legal expert and founder of Crypto Law, John E Deaton, weighed in  on proceedings regarding a lawsuit filed by the US Securities and Exchange Commission (SEC) against US-based Coinbase.

Deaton’s also a representative of XRP holders and enthusiasts. For that reason, Deaton sees Ripple’s case, along with the potential for SEC’s appeal, anchored to Coinbase’s litigations.

Coinbase MTD

In July, Ripple won a partial victory against the SEC when US District Judge Analisa Torres ruled that XRP is not a security, dismissing the SEC’s allegations of illegal trading in unregistered securities by the company.

However, the SEC still has the option to file for an appeal, in hopes of reversing the ruling many crypto institutions rely on to dismiss their own SEC litigation proceedings. 

“The only way @Ripple and the @SECGov settle before the end of the year is if Judge Failla grants the @coinbase MTD [Motion To Dismiss] (or partially grants it – finding token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws but allows the staking component to move forward),” said  Deaton.

Deaton’s stance on the SEC’s Chair Gary Gensler is clearly one of opposition. “When you have a bad faith regulator like @GaryGensler, there’s no “working together,” said  Deaton.

The crypto legal expert also cites facts from Grayscale’s lawsuit against the regulating body, saying “Do people understand how rare it is for an appellate court to say a regulator is arbitrary and capricious? All the SEC had to do was come up with “reasonable explanation” as to why they denied a spot ETF. They couldn’t even meet that very low threshold. 

Gensler and the SEC is acting in such bad faith a federal judge called them hypocrites and said they lack faithful allegiance to the law. You can’t work with that type of regulator. You defeat them. Remove them. Then you work with the good faith regulator who replaces him.”

Deaton did not immediately respond to a request for comment.

Ripple X SEC’s Interlocutory Appeal

As a strong supporter of Ripple’s XRP and also a representative of many members of its community, Deaton sides with Ripple in the lawsuit filed against the company by the SEC. Even though Ripple landed a monumental partial win against the regulating body, Gensler and the SEC may still file for an interlocutory appeal with the 2nd Circuit Court.

Deaton cites the SEC’s claim to the Howey test, and how it should be the definitive factor in any “unregistered security” claim by the regulating body.

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