Attorney Deaton sheds light on an important legal precedent from the Second Circuit that could influence the outcome of the SEC’s legal battles against Coinbase and Ripple.
Coinbase Chief Legal Officer (CLO) Paul Grewal and pro-XRP attorney John Deaton have identified an important case that could determine the outcome of the SEC’s lawsuits against Ripple and Coinbase.
Revak v. SEC Realty Second Circuit Decision
In a recent tweet, Grewal expressed his admiration for a Second Circuit decision in the 1994 case involving Revak and SEC Realty.
In particular, the CLO identified a crucial factor in the decision, highlighting the recklessness in defining security through the lens of ecosystem access.
Grewal focused on a portion of the decision in which the Second Circuit found that the correlation between a promoter’s efforts and investors’ fortunes does not easily satisfy the Howey test.
To interpret the Howey test, the court held that a joint venture can only be formed when “The randomness of investments collectively essentially depends on the experience of the promoter.”
Deaton reacts
Grewal’s tweet prompted a reaction from Deaton, who drew parallels between the Revak case and the SEC’s legal disputes with Ripple, Coinbase and LBRY.
The pro-XRP lawyer pointed out the jurisdictional nuances in the lawsuits. While Deaton said the LBRY case is in the First Circuit, he said Ripple and Coinbase’s lawsuits against the SEC are in the Second Circuit.
According to Deaton, cases involving Ripple and Coinbase are governed by the Second Circuit and the Revak decision. In response, Grewal agreed with Attorney Deaton’s opinion on the matter.
Yes, sir. Yes.
— paulgrewal.eth (@iampaulgrewal) January 28, 2024
Importance of the Ripple and Coinbase cases
The importance of the SEC’s cases against Coinbase and Ripple cannot be understated, as both lawsuits are expected to impact the future of the cryptocurrency industry.
The Ripple lawsuit is in the final (remedies) stage, where the court will determine the appropriate fine the company will pay for violating the law through its institutional sales of XRP.
According to the latest lawsuit update, the SEC wants the court to force Ripple to produce certain documents related to its post-complaint institutional sales of XRP.
On the other hand, the lawsuit against Coinbase is still in its early stage. The SEC and Coinbase are still awaiting the court’s decision on the hearing of Coinbase’s motion to dismiss the case.
Some legal experts, including attorney James Murphy (aka MetaLawMan), speculate that the court will issue its decision within three months.
