Attorney Deaton Explains How SEC Will Use Its LBRY Victory in Ripple Lawsuit

Attorney Deaton said the SEC will cite the case in its upcoming reply to Ripple’s summary judgment motion. 

The cryptocurrency community has been reacting to reports of the SEC winning against popular peer-to-peer content distribution company LBRY. Recall that in May 2021, the SEC sued LBRY for offering unregistered security to U.S. investors. The SEC slammed the lawsuit against the P2P content distribution company just months after filing a similar case against Silicon Valley tech firm, Ripple. 

SEC to Use LBRY Ruling Against Ripple and other Cryptos

Many crypto and legal analysts have predicted that the outcome of the LBRY case will play a pivotal role in the Ripple lawsuit. Attorney John Deaton, the founder of Crypto Law, was among the legal analysts who reacted to the SEC’s victory against Ripple. 

In a tweet today, attorney Deaton noted that while he is yet to go through the ruling, he believes the Securities and Exchange Commission will make reference to the LBRY verdict in its upcoming reply briefs to Ripple’s summary judgment motion. 

He said Ripple would also likely distinguish the case based on facts in the company’s own reply to the SEC’s summary judgment motion.  

“This decision is in the 1st Circuit. The Ripple XRP case is in the 2nd Circuit and has a different precedent like the Upton case,” he added. 

Haven’t had time to read it, but I’m sure @SECGov will cite it in the reply brief due in a couple of weeks and @Ripple will distinguish it on the facts. This decision is in the 1st Circuit. The Ripple XRP case is in the 2nd Circuit and has different precedent like the Upton case. https://t.co/72gEIJ6vMi

— John E Deaton (220K Followers Beware Imposters) (@JohnEDeaton1) November 7, 2022

In a separate tweet, Deaton further said the SEC scored a flawless victory against LBRY, as the court did not distinguish between the sale of the token. He added that the SEC and its chairman, Gary Gensler, would use the case as an example against crypto projects going forward. 

This, unfortunately, is a total win for the SEC, as the judge does not distinguish secondary market sales independent of @LBRYcom or future sales versus past sales. Get ready to 🤮 w/ @GaryGensler and the SEC using this case as an example to move forward against Crypto. https://t.co/cqDBWcYH2M

— John E Deaton (220K Followers Beware Imposters) (@JohnEDeaton1) November 7, 2022

Also commenting on the development is attorney Jeremy Hogan, Partner at Hogan & Hogan firm. Attorney Hogan also expects the SEC to use its victory over LBRY in the Ripple lawsuit. 

LBRY fought the good fight but lost at summary judgment.

The Judge hung his hat largely on the fact that there was essentially no use for the tokens at the time of the sales.

I would expect this case to make its way into the SEC’s final brief in the Ripple case. https://t.co/IDlq8J4RMS

— Jeremy Hogan (@attorneyjeremy1) November 7, 2022

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