- Pro-XRP lawyer, John Deaton, disputes the Terra judge’s interpretation of the Ripple case verdict, insisting it’s not as inconsistent as it appears.
- He also highlights where the Terra judge erred in his understanding, stressing that Judge Torres’ duty was to apply the Howey test to the Ripple case impartially.
In the recent discourse surrounding US District Judge Jed Rakoff’s verdict in the SEC vs Terra case, pro-XRP attorney John Deaton has offered his expert insights. He argues that Judge Rakoff incorrectly interpreted Judge Analisa Torres’ ruling in the SEC vs Ripple case.
But is Rakoff’s finding that secondary market purchasers relied on the Defendants’ statements and thus, expected profits, vastly different from what Torres said?
NOT AT ALL.
Torres said of course some buyers in the secondary market on exchanges could’ve relied on Ripple in… pic.twitter.com/ltQ89xrDLB
— John E Deaton (@JohnEDeaton1) August 3, 2023
The Controversy: Terra Judge’s Disagreement with Ripple Verdict
Judge Rakoff had expressed disagreement with Judge Torres’ reasoning in the Ripple lawsuit. His main area of contention was Judge Torres’ differentiation between Ripple’s sales to retail and institutional investors. According to Judge Torres, Ripple’s programmatic sales on digital exchanges were non-securities, as retail purchasers did not foresee profiting from Ripple’s efforts. Conversely, she deemed Ripple’s past XRP sales to institutional investors as securities, given these buyers expected gains via Ripple’s exertions.
However, Judge Rakoff contested this reasoning. He posited that the Howey test, a standard for defining securities in the US, does not make such distinctions between investor types.
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Deaton’s Perspective: Inconsistency or Misinterpretation?
Reacting to Judge Rakoff’s ruling and its impact on the Ripple case, attorney Deaton voiced his views in a recent thread. Contrary to popular opinion, Deaton stated that the Terra judge’s ruling is not as inconsistent as it’s perceived.
Deaton was not surprised that Judge Rakoff referenced Judge Torres’ decision, especially given Terra’s attempt to dismiss the SEC lawsuit using the Ripple verdict. However, he was surprised by the way Judge Rakoff addressed the Ripple ruling.
Refuting claims that Rakoff was siding with the SEC, Deaton emphasized the judge’s reputation for being critical and assertive, even with other judges’ decisions.
Where Terra Judge Misread Ripple Ruling
Deaton pointed out Judge Rakoff’s misinterpretation in his ruling. He claimed that Judge Rakoff incorrectly suggested that Judge Torres focused on the investor type in her ruling. Instead, according to Deaton, the inconsistent results for retail and institutional investors emerged after Judge Torres applied the Howey test to the Ripple case’s specifics.
Deaton stressed that Judge Torres’ duty was to impartially apply the Howey test to each type of XRP transaction alleged by the SEC to be in violation of the law. After an objective application, the result is what it is, regardless of investor sophistication level.
By offering this analysis, Deaton brings clarity to the ongoing debate, ensuring the Ripple case’s unique legal nuances are understood accurately in the wider crypto community.
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