Noted attorney John E. Deaton, who represents over 75,000 holders in the ongoing Ripple-SEC lawsuit, and Paul Grewal, Chief Legal Officer of Coinbase, are of the unanimous opinion that the SEC’s Interlocutory Appeal is headed for a dismissal. The U.S. Securities and Exchange Commission (SEC) is facing increasing criticism for what appears to be inconsistent and irrational arguments in its enforcement actions against cryptocurrency companies.
Increasing Concerns Over SEC’s Approach
These concerns are most apparent in the XRP lawsuit, where judges have lambasted the SEC’s positions as “arbitrary and capricious”. Judge Netburn even termed the inconsistency in their argument as “hypocrisy” in the Ripple lawsuit. John E. Deaton has highlighted that both federal judges and members of Congress are taking note of what they see as hypocrisy within the SEC’s actions.
Surprisingly, even Paul Grewal of Coinbase has used the term “hypocrisy” in his evaluation of Ripple’s response to the SEC’s interlocutory appeal. He also lauded Stuart Alderoty, the Chief Legal Officer at Ripple, and his legal team for effectively countering the hypocrisy.
Question of Law Contention
A significant point of disagreement is the SEC’s emphasis on the “question of law” requirement for interlocutory appeals. This is a legal phrase that refers to whether an appeal primarily deals with legal questions rather than factual ones. This argument has been historically rejected by many courts due to its apparent lack of authority which the SEC has failed to address.
Mounting Troubles for SEC
As Deaton pointed out earlier, Judge Sarah Netburn, who is presiding over the XRP lawsuit, also voiced concerns about the SEC’s inconsistent stances, echoing sentiments expressed by judges in the Grayscale lawsuit who criticized the SEC’s actions as “arbitrary and capricious.” The SEC could not provide a convincing rationale for its rejection of Grayscale’s Bitcoin ETF conversion, leading the Judges to rule in favor of Grayscale.
Both Deaton and Grewal firmly believe that the SEC’s interlocutory appeal is treading on shaky ground. Deaton has already shared his predictions on Judge Torres’s decision on the SEC interlocutory appeal and the growing criticism and apparent inconsistencies in the SEC’s arguments are enough to inspire confidence that their appeal is likely to be dismissed.
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