Experts predict that SEC’s appeal for ‘Crybaby’ is likely to result in a failure.

The ongoing legal battle between the Securities and Exchange Commission (SEC) and Ripple took an unexpected turn as the SEC considers appealing the landmark ruling that deemed Ripple’s XRP token not to be a security. The revelation came to light through an SEC filing related to another case, SEC vs. Terraform Labs/Do Kwon, as revealed by renowned former federal prosecutor and defense attorney James K. Filan.

Filan highlighted the SEC’s latest move in a tweet, pointing out that the commission discussed Judge Torres’s decision in the Ripple case and indicated that the SEC staff is considering avenues for further review. The SEC intends to recommend seeking such review. This development raises questions about the motivations behind the SEC’s potential appeal.

John Deaton, a lawyer and founder of CryptoLawUS, weighed in on the matter, suggesting that the SEC’s appeal on secondary market sales is likely to fail. Deaton commended Judge Torres for applying the Howey test in the judgment, emphasizing that considering other factors would have been an error. Deaton further argued that even if the SEC succeeded in its appeal, Judge Torres is likely to find that the SEC failed to prove a common enterprise between Ripple and XRP holders in the secondary market. He criticized the SEC for flip-flopping on its common enterprise theory during the case, ultimately arguing that XRP itself represented the common enterprise, a circular and conclusory theory.

Deaton didn’t hold back in his criticism of the SEC, describing their lawyers as “Prima Donna crybabies” until they can cite a Supreme Court case adding a factor to the Howey test regarding the sophistication level of investors or consistency with the policy considerations of the 1934 Securities Act.

With the potential appeal by the SEC, the legal drama surrounding Ripple and the SEC continues, leaving the cryptocurrency community on edge. The outcome of the appeal could have significant implications for Ripple and the broader crypto industry.

Sources:
– Coinpedia: SEC vs. Ripple Lawsuit Update – When Can We Expect the US SEC Appeal? Legal Expert Weighs In
– Coinpedia: Ripple SEC Update: SEC Chair Expresses Disappointment Over Non-Security Classification
– Twitter: James K. Filan tweet
– Coinpedia: Deaton Slams SEC, Calls for Regulatory Overhaul Amid Syndicated Loan Controversy
– Twitter: John Deaton tweet
– Coinpedia: SEC vs Ripple Ruling Predicted to Have Three-Year Impact, Deaton Forecasts