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XRP Lawyer Files Amicus Brief To Support Ripple’s Other Lawsuit

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Attorney and XRP representative John E Deaton has filed an amicus brief to support Blockchain firm Ripple in a different lawsuit, as per an update shared by another prominent member and lawyer James K Filan

In an exciting turn of events, John Deaton’s entry in Ripple’s California case is slated to keep the limelight on the blockchain firm even more.

For context, a section of XRP investors has filed a class action suit against Ripple and its CEO, Brad Garlinghouse. in 2018.

The plaintiffs, in the lawsuit, claimed that the company offered XRP as an unregistered security and demanded compensation for the losses they sustained. They are also asking the court to declare the token as a security.

Moreover, there are three lawsuits in the case of lead plaintiff Bradley Sostack as well, including ones from Zakinov, Oconer, and Greenwald. These lawsuits have since been combined into one.

According to Filan, the most recent submission by Deaton is filed on behalf of all 75,890 XRP holders in the SEC lawsuit who disagree with the plaintiff’s claims.

Furthermore, Deaton will also argue that the majority of investors believe that the token should be regulated rather than classified as a security, contrary to the move of the small number of XRP holders.

“John Deaton will argue that those small number of plaintiffs in Zakinov cannot fairly represent so many who disagree with them, including XRP Holders in places where the asset is not even considered a security,” Filan stated. 

Ripple’s Class Action And The SEC Lawsuit Would Give A Clarity On XRP’s Classification

It should be noted that the proposed class action complaint covers all token sales, including secondary sales and sales done worldwide in nations where XRP has already been found not to be a security.

That said, fintech powerhouse Ripple is also in the final leg of its long-running legal fight with the US regulator the Securities Exchange Commission over the sale of XRP tokens.

Whatever may be the outcome, the case, alongside the SEC lawsuit, is expected to give a clear direction on the classification of the token.

Deaton who is an outspoken supporter of XRP has recently commented on the Ripple and SEC lawsuit.

In it, he stated that he has no doubt about the court ruling in favor of Ripple. “I have zero doubt that the current makeup of the U.S. Supreme Court will rule in favor of Ripple if it goes that far.”

Gemini & Genesis Embarks On A $100M Agreement

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Gemini exchange agrees to commit up to $100 million in cash for its customers as part of a restructuring deal and recovery plan with the now-bankrupt Genesis Global Capital and parent firm Digital Currency Group.

In a court hearing held on 6th Feb., Gemini announced the agreement in principle with Genesis DCG and other creditors on a plan that provides a path for Earn users to recover their assets.

As part of this initiative, the Winklevoss twins-led trading firm, will donate up to an additional $100 million to Earn users.

It needs to be recalled that the trading firms were involved in a bitter public spat over $900 million in customer assets where both sides accused each other of perpetuating fraudulent activity, misleading accounting, and misguided public statements.

The contentious relationship had its origin way back in Dec 2020 when the two firms forged a deal to give the latter’s customers the option of lending their cryptocurrency to Genesis.

As part of the agreement, Genesis would agree to pay interest on the loans being issued.

Then in February 2021, both firms introduced the Gemini Earn program to retail investors, who then “tendered their crypto to Genesis.”

The agreement also entailed that Gemini would act as the facilitator and earn a 4.29% agent fee, and Genesis would then “exercise discretion in how to use investors’ crypto assets to generate revenue and pay interest to the latter’s Earn investors.”

Gemini Customers Filed Class Action Suits

For months, Gemini customers loaned money to Genesis for placement across various crypto trading desks. Following the FTX crash, Genesis filed for bankruptcy and was forced to temporarily shutter its operations, as well.

Withdrawals on Earn have been temporarily suspended for almost three months. Naturally, the 340k retail customers of Gemini are upset, and some of them have joined hands to file class actions against the two firms.

Even the SEC has filed a lawsuit against the two firms alleging the sale of unregistered securities, TronWeekly reported the other day.

With the latest deal hoping to bring relief for the investors, Gemini released the following statement:

This plan is a critical step forward toward a substantial recovery of assets for all Genesis creditors. It demonstrates Gemini’s continued commitment to helping Earn users achieve a full recovery.

The broader details of the restructuring plan were announced in Manhattan bankruptcy court.

XRP: LBRY’s “Major Win” Sends Ripple Fans Into A Frenzy

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XRP/Ripple lawsuit is heading to a decisive end either through settlement or summary judgment. But a recent ruling of Ripple’s ally LBRY against the SEC has rekindled hope for the crypto community.

In what is touted to be “crypto’s major win”, the US regulator opted for settlement with the decentralized payment network LBRY after admitting publically that the sale of LBRY Credits [LBC] tokens in the secondary market didn’t constitute security. 

Prior to that, on November 7, 2022, during the hearing, the SEC was granted summary judgment in its favor. The verdict, which covered a six-year period, classified each sale of the LBC token as an investment contract without going into specifics about the transactions.

According to multiple reports, the SEC wanted to legitimize the secondary market and bring it under its jurisdiction. The top agency has requested the district court judge in New Hampshire to uphold the broad, vague injunction banning its sale.

XRP defendant and founder of the law firm CryptoLaw, John Deaton filed an amicus brief, seeking clarity for LBC secondary market transactions, as according to him the injunction was “ambiguous and broad”.

For those new, an amicus curia is an individual or organization that is not a party to a legal case but is permitted to assist a court by offering information, expertise, or insight that has a bearing on the issues in the case.

XRP Defendant’s Move In The LBRY Case Invited Praise From Community

In a long thread of tweets, Deaton revealed that the judge explicitly stated that his ruling did not apply to secondary sales of LBC.

He [the judge] also said repeatedly that although he denied the Fair Notice defense, the SEC must admit that this case was one of the first non-ICO digital asset cases filed and it was at a time that clarity wasn’t great.

The settlement in the latest LBRY vs SEC case came during an appeal hearing on Jan. 30. As details of the ruling emerged, the native asset of the LBRY blockchain, LBC skyrocketed by a whopping 140%.

On the other hand, the verdict also sparked hope among the XRP community as blockchain firm Ripple is currently embroiled in a securities lawsuit with the SEC over the sale of XRP tokens.

One pro-XRP Twitter account claimed that the ruling also makes XRP a non-security. Others tweeted the this woulld likely force SEC into settling with Ripple as well.

Ripple’s Total XRP Sales In Q4 Was Over $226M: Details

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Ripple has published its Q4 2022 report where its net sales of XRP via On-Demand Liquidity [ODL] reached $226.31 million.

According to the report, a total of $2.96 billion in XRP was sold by Ripple through On-Demand Liquidity [ODL] corridors, of which $2.74 billion was redeemed back and $2.1 billion was placed back into escrow accounts.

By the end of Q4 2022, XRP spot markets experienced a general downtrend by way of average daily volumes [ADVs] currently at roughly $700 million, down from $1.1 billion in Q1 2022. This is consistent with crypto more broadly, wherein the derivatives market, open interest for BTC was down 15% from Q3 2022 and 30% from Q4 2021 while open interest for ETH was surprisingly more resilient, down less than 10% from Q3 2022 and 25% from Q4 2021.

However, the figure was down by 27% from its previous quarter where the sales stood at $310 million.

Despite the dip, the San Francisco-based firm which pioneered the crypto-enabled cross-border payments known as the ODL expanded its footprint into the French, Swedish, and African markets through new partnerships.

The report also took note of the crypto market turmoil in the Q4 of 2022 where liquidity suffered following the FTX crash.

Companies that develop solutions with practical utility will prevail and endure through the crypto winter as the industry entered a phase of consolidation, the firm noted.

It needs to remind that the fintech powerhouse Ripple has been a buyer of XRP in the secondary market and expects to continue to undertake purchases as ODL continues to gain global momentum. 

Total sales by Ripple, net of purchases, ended the quarter at 0.35% of global XRP volume according to CryptoCompare TopTier [CCTT] volumes.

That said, roughly half a billion XRP was transferred In two transactions.

Ripple Lawsuit Impending Judgement triggers Huge transactions

As reported by prominent crypto tracking service Whale Alert, over the period of the last 24 hours, a staggering amount of XRP was transferred by unknown wallets — over 410 million coins.

The aforementioned cryptocurrency tracking platform discovered two XRP transactions- 253,594,773 and 160,000,000 XRP, each worth $103,264,033 and $65,533,398 respectively, were shoveled.

The latest movement has been attributed to the interviews by Ripple Chief Executive Brad Garlinghouse where he stated that the court’s decision regarding the long-running case of the SEC against Ripple is to be delivered this year, probably even during the next few months.

Ripple Supreme Court Showdown: Pro-Crypto Lawyer Weighs in On SEC Lawsuit & Grayscale ETF Conversion

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Pro-crypto lawyer John Deaton took to Twitter to weigh in on the ongoing legal battle between Grayscale and the SEC over the conversion of Grayscale Bitcoin Trust (GBTC) into a Bitcoin exchange-traded fund (ETF). Deaton also commented on the SEC’s lawsuit against Ripple Labs, suggesting that it could also make its way to the U.S. Supreme Court.

Deaton stated that he believes the odds of a Grayscale win before the D.C. Circuit are 50/50 and a win before the Supreme Court are 75-80%. He argued that under the law, the SEC’s denial of a spot BTC ETF while allowing both a futures ETF and a short ETF is arbitrary and capricious.

He also commented on the SEC’s case against Ripple Labs, stating that he has “zero doubt that the current makeup of the U.S. Supreme Court will rule in favor of Ripple if it goes that far.” Deaton argues that the SEC went too far in its allegations against Ripple and that the case rests on “demonstrably false premises.”

Dave Weisberger, CEO of CoinRoutes, also weighed in on the discussion, stating that the SEC’s case is based on false premises and ignores precedent set by approved gold spot ETFs, while the Bitcoin spot is more transparent and liquid. He also argued that the availability of GBTC for purchase in brokerage accounts harms investors directly, against the SEC’s mandate.

Latest Update On Ripple Lawsuit

In a recent development in the ongoing legal battle between Ripple and the SEC, an investment banker declarant, who is an employee of an SEC-regulated entity, has filed a response to Ripple’s opposition to an earlier motion to keep his name, position, and employer private. 

The response, which was submitted by the investment banker’s legal representatives, points out that the declarant submitted his statement to the SEC “voluntarily,” but in reality, the options presented to him were to provide a declaration or to testify. 

The investment banker’s firm is an SEC-registered broker-dealer, and, as such, the declarant had no choice but to comply with the request from the SEC. The document, which was attached to James K. Filan’s tweet, stated:

Where a witness’s only options are to provide a declaration or to testify, there is no truly voluntary choice to be made.

Related Reading | Bitcoin (BTC) Market Sentiment Flips: Risk Reversals Show Bullish Shift

Ripple Lawyer Challenges SEC’s Classification of XRP as Security, Citing Government Agencies’ Statements

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In a recent Twitter thread, pro-Ripple lawyer John Deaton presented a strong case arguing that the US Securities and Exchange Commission (SEC) is wrong in tagging XRP coin as a security. 

Deaton challenges the SEC’s claim by referencing statements from Bill Hinman, Director of the Division of Corporation Finance at the SEC, who said in 2018 that a digital asset is more likely to be considered a security if it is “sold as part of an investment – to non-users – by promoters.” 

Deaton argues that this does not apply to XRP holders, many of whom acquired the coin to establish a TrustLine with the XRPLedger for value transfer or to pay salaries through BitPay and other vendors.

Deaton also points to the SEC’s own framework for digital assets, which states that crypto is unlikely to satisfy the Howey test (which determines if an asset is a security) if “it can immediately be used to make payments in a wide variety of contexts, or acts as a substitute for real (or fiat) currency.”

Ripple XRP And Other Government Agencies

The lawyer goes on to highlight statements from other government agencies, such as the US Government Accountability Office (USGAO) and FinCEN, that have classified XRP as a virtual currency.

He also references a 2015 settlement between Ripple and FinCEN & the DOJ, which forced Ripple to comply with banking laws rather than securities laws and required the company to hire an independent third-party auditor to provide the government with annual audits of all XRP sales for five years.

Deaton argues that the SEC’s approach to crypto has been inconsistent and contradictory, referencing the fact that the SEC staff were allowed to own and trade XRP until April 2019. 

The agency took no action when MoneyGram filed a disclosure with the SEC in 2019, informing them that Ripple was going to be transferring XRP to them for use in their cross-border payments business. 

He also suggests that there is more non-public information that will further support Ripple’s case. John Deaton said:

What I’ve discussed above is public. It doesn’t take into consideration the non-public information. Now, wait until we see the Hinman emails and drafts of the speech.

Related Reading |  Ethereum Launches Its First Mainnet Shadow Fork: Details 

Ripple CTO & Podcaster Debate XRP’s Fate in Ongoing SEC Battle: Commodity or Security?

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In a recent Twitter talk, Ripple CTO David Schwartz and podcaster Jay’V discussed the definition of XRP as a commodity. The conversation began with a tweet from lawyer Bill Morgan, who expressed his opinion that the matter would ultimately go to a judgment. CEO of Ripple, Brad Garlinghouse, previously stated that he is confident in the law and the facts surrounding the case.

However, Jay’V argued that it is unlikely that the SEC would settle and allow Ripple to continue with their current business model. He also expressed concern that if Ripple is able to continue “with no changes,” it would open the door for a plethora of new crypto projects and startups to follow in Ripple’s footsteps.

In response, Schwartz stated that he does not see any problems arising from a ruling that says that selling a commodity with no post-sale obligations is not an “investment contract.” Jay’V acknowledged that Ripple has no legal obligations to XRP holders but argued that XRP has not yet been officially deemed a commodity by the courts.

Schwartz maintained that XRP is a raw good that trades in commerce and that one XRP is treated as equivalent to every other XRP, which he believes meets the definition of a commodity. He added that no part of XRP’s value comes from anyone else’s legal obligations to XRP holders.

However, the ongoing legal battle between Ripple and the SEC over the classification of XRP continues to be a topic of discussion among industry experts, with the outcome of the case likely to have a significant impact on the crypto industry as a whole.

Ripple Ongoing Lawsuit Expected To End By June

As TronWeekly reported previously, Brad Garlinghouse, the CEO of Ripple, mentioned that now that both parties have presented their arguments in the U.S. District Court, a decision in the case could be made as early as June. 

In an interview, he stated that while they do not have control over when a judge will make their decision, they anticipate it to be made in 2023 within the next few months, expressing optimism for closure in the near future.

Following this, there is much optimism for Ripple’s XRP. Data from CoinMarketcap shows that XRP is currently trading at $0.4079. The daily chart indicates a 3.73% increase, and a 4.69% increase can be seen on the weekly chart.

XRPUSDT 2023 01 21 03 03 09
Source: Tradingview

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Ripple CEO Hints At Damning Information In SEC Director’s Emails At WEF Davos

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The CEO of Ripple, Brad Garlinghouse, expects that the legal dispute with the Securities and Exchange Commission (SEC) will be resolved within a few months and feels optimistic about a positive outcome.

During his interview with CNBC’s “Squawk Box Europe” on January 18th at the World Economic Forum in Davos, Garlinghouse mentioned some emails from SEC Director Bill Hinman. These emails were ordered to be given to a judge, and Brad Garlinghouse suggested they might contain Damning information.

Garlinghouse said:

Judges take however long the judges will take. We’re optimistic that this will certainly be resolved in 2023, and maybe [in] the first half. So we’ll see how it plays out from here. But I feel very good about where we are relative to the law and the facts.

Ripple lawsuit To be Solve By June 2023

Brad Garlinghouse stated that the decision in the case could be reached as early as June now that both parties have presented and elaborated on their arguments before the U.S. District Court.

According to the CEO of Ripple, Garlinghouse:

We expect a decision from a judge certainly in 2023. You don’t really have control over when a judge makes their decisions. But I’m optimistic that sometime in the coming single-digit months, we’ll have closure there.

Ripple’s CEO has stated that while the company is open to settling with the SEC, it requires one crucial requirement to be met: that XRP is not considered a security going forward. The SEC and its Chairman Gary Gensler have publicly stated that they view most cryptocurrencies as securities, leaving little room for compromise in the matter.

However, the outcome of the SEC’s case against Ripple over the classification of XRP as a security carries significant consequences for both the company and the broader cryptocurrency market. 

A ruling that XRP is a security could result in stricter regulations on Ripple regarding the token. Additionally, it could establish a precedent for many other crypto and blockchain projects that are considered securities.

Garlinghouse emphasized the significance of the lawsuit’s outcome and highlighted that it is crucial not only for Ripple but also for the entire crypto industry in the United States. He said this is something he repeatedly heard echoed at the World Economic Forum in Davos.

He added:

I keep reminding people that outside the United States, crypto is still thriving, Ripple’s still thriving, and we should make sure we’re continuing to engage non-U.S. regulators as well.

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Recent Bitcoin Price Rally Is Due to Market Manipulation, Says Ex-SEC Member 

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Ex-SEC member John Reed Stark recently took to Twitter to share his thoughts on the recent rally of Bitcoin, the world’s largest cryptocurrency. According to Stark, the recent rally in Bitcoin’s price is due to market manipulation. 

Citing a Forbes analysis of 157 crypto exchanges, Stark claims that 51% of daily Bitcoin trading volume is likely fake and that this is just the tip of the iceberg. He also references a post by David Gerard, which addresses why the Bitcoin price is heading toward $20,000.

Why Bitcoin Price Is On the Rise

Journalist David Gerard has provided his insights on the question of why the Bitcoin price is heading toward $20,000. He argues that the answer is always “shenanigans” and that the cause is never macroeconomic actions, regulatory announcements, or the dollar’s strength. 

Gerard believes the recent rally in Bitcoin’s price is due to bad news for major players and market manipulation. He cites events such as the potential insolvency of Genesis, lawsuits against Gemini and Genesis by the SEC, and Nexo’s downfall as examples of bad news. 

He also notes that market manipulation may occur as it can be cheaper to rig the price than to win a margin bet. Gerard states that the Bitcoin market is small and easily manipulated, with billions of unbacked stablecoins on unregulated exchanges.

According to him, the price needs to be high enough to prevent loans from getting liquidated but low enough to prevent bagholders from cashing out.

He pointed out the artificial price pumps seen in the Bitcoin market chart, arguing that the notion of broader market forces shaping the price of BTC is part of a general delusion that well-behaved markets are natural. 

b3c85739bbe1d887
Source: David Gerard Post

He states that the proper regulation of markets like the US stock market for nearly a century has created a controlled environment, unlike the largely unregulated BTC market, where price discovery occurs in offshore casinos with little oversight. 

He asserts that BTC is a manipulated pile of trash, and the price is easily manipulated by exchanges like FTX and Binance, which engage in front-running and other unethical practices.

Bitcoin is utterly not the same sort of creature – it’s a pile of manipulated trash, where the price discovery happens in unregulated offshore casinos who are under literally no rules except “don’t spook the sucker”.

Bitcoin Price Review

As TronWeekly reported, BTC rose to a two-month peak on January 12th, breaking above $19,000, and briefly exceeded $20,000. The price climbed above and reached around $21,000 on early January 14th.

However, according to Coinmarketcap, the current trading price of BTC is $21,101.32. The daily chart shows a 1.89% increase and an impressive 22.73% rise in the last seven days. The 24-hour trading volume is down by 20%, while the market cap is up by 2%.

BTCUSDT 2023 01 16 12 57 37
Source: Tradingview

Bitcoin ETF Rejection: Grayscale Submits Response Brief in Appeal Against SEC 

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Grayscale has submitted a response brief in its appeal against the US Securities and Exchange Commission’s (SEC) rejection of its proposal to transform its $12 billion Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF that is based on spot prices. 

The brief, which was filed in the District of Columbia Circuit Court, refutes the points made in the SEC’s December response brief and reiterates Grayscale’s original arguments.

GBTC Conversion To A Spot Bitcoin ETF

Grayscale’s Chief Legal Officer, Craig Salm, announced via a Twitter thread that they had filed a reply brief in their appeal against the US SEC. Salm stated that this is a significant milestone as Grayscale filed the Petition for Review in June, their Opening Brief in October, and the SEC’s Reply Brief in December. 

The recent brief is shorter than the previous one and “addresses counterpoints made by the SEC in their brief while also re-emphasizing key substantive arguments from” the Opening Brief.

Salm accused the SEC of treating spot bitcoin ETFs differently from bitcoin futures ETFs, despite both deriving their pricing from the same underlying spot bitcoin markets. 

Salm further stated that the “significant market test” used by the SEC to evaluate the proposal is deeply flawed, exceeds their statutory authority, and is arbitrary and unreasoned. 

Salm also stated that Grayscale believes:

Our proposal to convert GBTC to a spot bitcoin ETF satisfies the requirements of the Exchange Act because it is designed to prevent fraud and manipulation while protecting investors and the public interest.

He also announced that they would continue to keep their community apprised of developments in the litigation. The next milestone will be their final briefs, due February 2nd. He also noted that the timing for oral arguments is uncertain, but it may be as soon as Q2, the final decision in DC Cir. App. Court could come by Fall.

Salm Call Support For Grayscale Bitcoin Trust’s Case

Grayscale’s Chief Legal Officer Craig Salm, in a tweet on January 11th, called on the public to support their case. He emphasized that this case is of paramount importance for the 850k+ shareholders who hold GBTC, as the conversion is expected to close the current discount to NAV and unlock over $4 billion of value. 

Salm also stated that Grayscale has some of the best legal minds representing GBTC shareholders in the District of Columbia Circuit Court of Appeals, including Don Verrilli, a former Solicitor General under the Obama administration, and his team at MTO and Davis Polk. 

While expressing confidence that the Court will rule in their favor, Salm also acknowledged that they have committed to exploring alternative paths to returning capital to GBTC shareholders if their legal challenge is unsuccessful. 

These options could include a tender offer for a portion of GBTC shares, subject to relief and approvals from the SEC, as outlined by Sonnen shein. 

However, Salm emphasized that pursuing an alternative path would deviate from GBTC’s long-held ETF aspirations and would not be an ideal outcome. It would also effectively mean that regulators have shut the door on efficient access to Bitcoin through US-regulated investment vehicles.

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