Amid ongoing legal battles for Ripple Labs, a victory in the SEC case could potentially invalidate the ongoing class action, says John E. Deaton
The flow class action against Ripple Labs, its CEO Brad Garlinghouse and its subsidiary XRP II, may be less of a concern for the company than expected, according to pro-XRP lawyer John E. Deaton.
In a recent tweetDeaton suggested that plaintiffs’ attorneys should hope for a Ripple victory in the ongoing SEC case, as a full SEC victory could lead to the creation of a fund to pay XRP holders, thereby undermining the class action.
Deaton further explained that if the SEC were to triumph entirely, it would be the agency that would collect the money, not the plaintiffs in the class action lawsuit.
The heart of the SEC’s cases and class action lawsuits rests on determining whether XRP, Ripple’s affiliate cryptocurrency, is considered a security. This crucial issue has been at the center of Ripple’s legal challenges in recent years.
Responding to concerns from international XRP holders, Deaton clarified that the classes certified in the class action only apply to US investors. He referred to the Financial Conduct Authority (FCA) in the UK and equivalent bodies in Japan, Singapore and the United Arab Emirates, which said that XRP is not a security. Therefore, the certification does not affect XRP holders in these jurisdictions.
Ripple Labs is currently facing both the SEC lawsuit and the certified class action lawsuit, and Deaton’s comments suggest that the former could have greater consequences for the company.
A victory for Ripple in the SEC case could not only transform the class action landscape, but also have far-reaching effects on the categorization and regulation of cryptocurrencies.