Attorney John Deaton, the founder of Crypto Law and staunch Ripple supporter, has pointed out what he opined to be the biggest threat to Ripple securing a complete victory over the U.S Securities and Exchange Commission (SEC) even as the case draws to an end.
According to Deaton, this threat is the possibility that Judge Analisa Torres, the presiding judge in the case, could “split the proverbial baby” by ruling partially in favour of Ripple and the SEC.
Judge Torres could rule that Ripple “offered” an unregistered security at some point but that the XRP token itself is not a security, nor are secondary market sales of the token an unregistered security offering, he noted.
The danger exists because securities laws do not need sales or transfer of an underlying asset to occur for a company to be liable for offering unregistered securities. Deaton added that he expects the SEC’s oral argument, if one should be conducted, to focus mainly on ‘offering.’
“[This] is the biggest danger to Ripple IMO. Application of the law doesn’t focus only on sales. In fact, a sale or transfer of the underlying asset doesn’t have to occur for a company to be liable. If there’s oral argument, I bet you hear the SEC lawyer focus a lot on the ‘offering.'”
A win for Ripple is still likely and is vital for crypto, according to Deaton
Meanwhile, Deaton also argues that an outright win for Ripple, in which the judge criticizes the SEC for pursuing the implausible theory that XRP is a security, is still highly possible. This ruling is also the most desired outcome for the crypto industry.
This is because any decision in the case will have a “huge impact practically and politically speaking.” A ruling favourable to Ripple would effectively halt the SEC chair Gary Gensler’s regulation by enforcement campaign against the industry.
A ruling in favour of the SEC’s argument would arm the regulator to go all out against other crypto firms and projects in the U.S.
Meanwhile, the case has entered the final stages following the filing of final motions for summary judgment by both the SEC and Ripple. Both parties and the broader community are awaiting a decision from the judge. It is anticipated that the wait could last a few months. Market participants also expect the price of XRP to soar when the case provides clarity for it.