If Ripple Loses XRP Holders Will Receive More Money from SEC Fund Than the Civil Case Against Ripple, Deaton Says

Sequel to a June 5 tweet in reaction to Ripple (XRP) holders’ securities lawsuit, Pro-XRP lawyer John Deaton wrote another post reaffirming his position regarding the development.

This class action is the least of Ripple’s worries. In fact, the plaintiffs’ attorney should be hoping the SEC loses and Ripple wins. If the SEC were to get a total victory, the SEC would be the one to collect the money and set up a fund to pay XRP holders thus, gutting this…

— John E Deaton (@JohnEDeaton1) July 5, 2023

In response to another XRP community member’s question on June 6, Deaton further elucidated the possible implications of Ripple’s failure or victory in the SEC lawsuit. 

He noted that class action plaintiffs (XRP holders) would receive more money from an SEC fund if Ripple loses against the SEC than they would in their civil litigation.

XRP Enthusiasts React to the Class Action Suit Against Ripple

Recall XRP investors sued Ripple Labs and its CEO for allegedly offering unregistered securities. 

On June 30, US District Judge Phyllis Hamilton, presiding over the lawsuit, certified the class of investors, allowing them to pursue their claims against the fintech company.

The development sparked reactions among XRP community members who share concerns about how the Ripple/SEC lawsuit would impact the civil lawsuit. 

In a June 6 tweet, an XRP community member asked Deaton what could happen to the investors’ civil lawsuit if Judge Torres rules the SEC case against Ripple.

The XRP enthusiast wanted to know if more holders could join the civil suit if Ripple loses instead of waiting for the company to appeal the judgment.

Deaton Explains the Implications of the Civil Lawsuit Against Ripple

In response, attorney Deaton explained that XRP holders won’t receive compensation for years if Ripple loses the SEC lawsuit. 

The lawyer noted that XRP holders would only receive reimbursement through the civil lawsuit if XRP loses on appeal against the SEC.

In addition, Deaton disclosed the expected outcome of the Ripple VS. SEC lawsuit if XRP loses. According to the attorney, Ripple will appeal Judge Torres ruling if it’s in the SEC’s favor.

Furthermore, he noted that the case would linger through the next two to five years if Ripple appeals, and the civil class action plaintiffs won’t be getting any compensation until the court reaches a verdict on the appellate. 

Deaton speculated that XRP might take the SEC case to the Supreme Court if Congress fails to interfere. According to DeatonRipple will win against the SEC at the Supreme Court.

A Win for the SEC Undermines the Plaintiffs’ Civil Litigation

However, Deaton considered a scenario where XRP loses the appeal, including the SEC lawsuit and the civil case. 

According to Deaton, the court would place SEC in charge of collecting and distributing the compensation money and not the civil case plaintiffs. It bears mentioning that the SEC demands disgorgement of the amount ($1.3B), which it claims XRP raised in its XRP ICO.

Deaton explained that if the regulator wins, it would collect the $1.3 billion and set up a fund to reimburse XRP holders, thus undermining the civil litigation.

Moreover, Deaton says XRP holders will benefit more from the SEC fund than the civil case because the attorneys will deduct a percentage of the recovery fund for legal fees. 

According to the top lawyer, the plaintiffs’ lawyers would want the SEC to lose because a wining for SEC would undermine the civil case.