- XRP lawyer John Deaton has revealed a crucial detail distinguishing the Terra ruling and the ongoing Ripple case with the SEC.
- Deaton explains that Ripple was cleared of all damages related to the issuance of the XRP tokens.
Following the ruling that Terra Luna is a security, the XRP community has been comparing that case and the ongoing Ripple case brought forth by the SEC. As CNF reported, the SEC recently celebrated a milestone victory after Judge Rakoff ruled that Terraform Labs’ digital assets, including UST, were issued as unregistered securities. This has raised great concern among the XRP community with a similar ruling looking likely for Ripple which has been entangled in a three-year-long legal case with the SEC.
XRP lawyer John Deaton has taken to X to shed some light on the difference between the two cases. Interestingly, despite the landmark ruling, the case did not impact the crypto landscape as expected with the Ripple case. The SEC has previously stated that only Bitcoin can be exempted from the securities status. If the regulatory agency wins its case against Ripple, this will set a precedence that impacts the rest of the crypto market.
Deaton has compared the cases to a road accident, noting;
the Terra case, imagine a drunk driver, looking down at his phone, texting someone, while driving 75 mph, after driving past a sign indicating a 35 mph speed zone, who then rear ends a car sitting at a🚦, causing that sitting car to ram into innocent pedestrians. The Government charges the Terra 🚗 driver for causing the accident and hurting those innocent pedestrians. The Government wins the case on all counts.
For the Ripple case, imagine a car driving 45 mph on a road that has no sign indicating the speed limit. The Ripple 🚙 gets pulled over after passing a 👮with a radar gun on the 🚙. The 👮 pulls the Ripple 🚙 over, but doesn’t give it a speeding ticket. Instead, the 👮♀️ says the registration sticker was expired and so the Government (ie FinCEN) fines the car $700 bucks and tells Ripple to make sure it always registers with that particular precinct. After issuing the registration ticket, the 👮 let’s the Ripple 🚙 keep moving forward, never telling the 🚙 it was also breaking the law by speeding. The Ripple 🚙 continues driving on that same road for over five years, always maintaining a 45 mph speed limit. While driving on the same road one day, a police car 🚔, driven by a dirty 👮♀️, on his last day of duty, runs a red🚦and hits the Ripple 🚙. The accident causes innocent pedestrians, caught in the middle of the crash, while waking 🚶♂️ 🚶♂️across the street, to be seriously injured. The Government then sues Ripple, claiming its 🚙 had always been speeding and also claiming Ripple caused the accident and thus, injured the innocent pedestrians.
The Howey test has been described as the ultimate decider on whether a token is a security or not. Deaton states that this will be crucial for Ripple to win its case. Ripple chief legal officer Stuart Alderoty commented on the post, stating;
I laugh when I see a crypto critic call the Terra ruling “mammoth” and then say Ripple’s victory is “minuscule.” Ripple’s win was a broadside, but even a small crack in a battleship compromises its structural integrity and will eventually sink it.
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