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Deaton Critiques the Settlement Proposal’s Shortcomings
Mixed Reactions from Legal Circles on Settlement Probability
After more than four years of intense legal battles, the lawsuit between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) is nearing its conclusion. Both parties have submitted a joint settlement proposal to the court to avoid prolonged appeal processes and delays. According to the proposal, Ripple will unlock $125 million of previously locked funds. From this amount, $50 million will be paid to the SEC as a civil penalty, and the remaining $75 million will be returned to Ripple. Legal experts, especially attorney John Deaton, estimate a 70% likelihood of the settlement being approved.
Deaton Critiques the Settlement Proposal’s Shortcomings
John Deaton argues that the SEC should admit to its past approach and take accountability. He expressed surprise that neither he nor fellow attorney Fred Rispoli had expected the parties to shower Judge Analisa Torres with excessive compliments in their presentations. Instead, Deaton anticipated the SEC would acknowledge its previously “arbitrary and capricious” strict approach towards the crypto sector. He reminded that in past court rulings, particularly in the Debt Box case, SEC attorneys faced sanctions, and in the Ripple case, Judge Netburn ruled that the SEC did not show “faithful adherence to the law.”
Deaton expected the parties to address the upcoming Clarity Act and Genius Act in their presentations, highlighting the necessity of the settlement to bring clarity to the industry. He pointed out the inequity of Ripple possibly facing an injunction while other crypto companies, like Circle, operate with clarity and banks prefer companies without ongoing litigation. Deaton emphasized the need for stronger arguments in presentations to reverse Judge Torres’s current ruling.
Mixed Reactions from Legal Circles on Settlement Probability
Attorney Fred Rispoli questioned the practical impact of the injunction. Rispoli wondered what the true purpose of maintaining the injunction was if the SEC could easily grant a simple exemption to Ripple. This raises doubts about the injunction’s real deterrent effect.
Former SEC official Marc Fagel also criticized the SEC’s recent presentation. Fagel pointed out that the emphasis on choices and policy changes did not provide a strong legal justification. This suggests that the SEC needs to rely on more solid legal foundations when defending the settlement. Meanwhile, attorney Bill Morgan noted the joint Ripple-SEC submission failed to become more convincing with more readings, although he predicted Judge Torres would likely approve the proposal. Morgan foresaw a general desire for the lawsuit’s conclusion taking precedence over the presentation’s content.
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