Former SEC Advisory Committee Member Says Agency Underestimated Ripple

The SEC case against Ripple over whether XRP is an unregistered security awaits a summary judgment ruling, which Deaton has asserted would come soon.

J.W. Verret, an associate law professor at George Mason University and a former member of the United States Securities and Exchange Commission (SEC) Investor Advisory Committee, has let slip that the agency underestimated Ripple.

Verret shared this view in a CryptoLaw TV stream yesterday that has made the rounds on Twitter. It came in response to inquiries from CryptoLaw founder Attorney John E. Deaton on why the SEC chose to go after Ripple, which is well-funded.

Verret said the agency underestimated the “fight” in Brad Garlinghouse, Ripple’s chief executive officer. The former SEC advisor said the regulator probably expected a settlement, a distant projection from how things have turned out.

“I don’t think they saw that coming, and I think they probably expected there would be a settlement,” the law professor said. “I think they underestimated the fight inside of Brad.”

Meanwhile, in the video over whether the SEC case against Ripple could make it to the U.S. Supreme Court, the professor noted that the journey there could exceed Deaton’s prediction for crypto legislation. According to Verret, assuming an appealable ruling on Summary Judgment, the journey from the appeal court to the Supreme Court could take four to five years.

Verret notes that he expects crypto firms to make breakthroughs in the appellate and Supreme courts. Noting that the SEC has managed to stretch Howey’s test in crypto enforcement actions in the past few years, he points out that the “nuance of the doctrine” is more important in these courts. He also says amicus briefs are essential at these levels as they give the judge different ways to overturn the SEC’s arguments. 

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Recall that Deaton has also tapped Ripple to win should the case make it to the Supreme Court. He expressed this view by citing the current Supreme Court justices’ aversion to regulatory overreach.

The SEC case against Ripple over whether XRP is an unregistered security awaits a summary judgment ruling, which Deaton has asserted would come soon. It bears mentioning that Ripple General Counsel Stuart Alderoty has hinted at Ripple’s readiness to go the distance in the fight against the SEC’s perceived overreach.

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