Deaton Says “If Ripple Loses, XRP Holders Will Receive More Money From SEC Fund Than Civil Case”

Attorney Deaton believes XRP holders will get more money from the SEC fund than the civil case against Ripple.  

Attorney John Deaton, the Managing Partner of the Deaton Law Firm, has continued to explain the implications of the civil lawsuit against Ripple Labs. 

Recall that a US district judge certified a class action against Ripple, granting United States-based XRP investors the right to sue Ripple, alleging the sale of unregistered securities. 

The development has continued to stir reactions from XRP community members, who are concerned about how the SEC vs. Ripple case will affect the civil lawsuit against the company. 

Yesterday, an XRP enthusiast asked attorney Deaton a pertinent question regarding both lawsuits. 

@JohnEDeaton1 if this verdict goes against ripple and the judge says XRP is a security, could we find that more XRP holders join the case that are suing ripple in Oakland CA, rather than waiting for appeal via a Supreme Court decision around the year 2030?

— XRP-Wing Commander Porkins 75k_JD QoS (@XRP_Red6) July 6, 2023

XRP Holders Will Not Collect Any Money for Years If Ripple Loses 

In response, Deaton explained that if Ripple loses to the SEC, XRP holders will not collect any money for years. He stressed that the issue of whether XRP holders will receive compensation via the civil lawsuit will only happen if Ripple loses on appeal against the SEC. 

If Ripple loses to the SEC there won’t be any money collected for years and ONLY if Ripple loses on appeal. If the Supreme Court takes it on appeal (which I believe they will if Congress hasn’t acted by then), I believe Ripple hands down wins with this Supreme Court. If the SEC… https://t.co/0xHw266YXf

— John E Deaton (@JohnEDeaton1) July 6, 2023

Furthermore, attorney Deaton highlighted the expected outcome of the SEC case if Ripple loses. According to Deaton, the leading blockchain company will appeal the SEC ruling if it loses.  

Additionally, Deaton said if Ripple appeals, the current status quo will continue to linger over the next two-five years. He speculated that Ripple could take the SEC case to the Supreme Court if Congress does not wade in. 

Per Deaton, Ripple will get a total victory against the SEC at the Supreme Court. 

SEC to Collect the Money If Ripple Loses 

Meanwhile, in a scenario where Ripple loses all the appeals, including the SEC and civil case, Deaton said the regulatory agency would be in charge of collecting the money, not the civil plaintiff. 

Notably, the SEC would collect $1.3B, the amount it alleges Ripple raised via XRP sales. After receiving the money, the SEC will establish a fund to pay XRP holders as recovery, thus undermining the civil plaintiff. 

“If I were the Plaintiff’s attorney in the civil case, I would want the SEC to lose because the SEC winning will gut the damages for the civil case,” said Deaton. 

XRP Holders to Get More Money From SEC Fund Than Civil Case

Furthermore, Deaton said if there is recovery, XRP holders will benefit more from the SEC fund than getting compensated via the civil case. 

According to Deaton, the civil case’s lawyers will get 25-35% of the recovery fund for the attorney fees. After taking the percentage, the attorneys will also deduct the cost of the case from the fund before distributing the rest to XRP holders, Deaton said.