Thread by @JohnEDeaton1

WILL THERE BE A SETTLEMENT IN @SECGov 🆚 @Ripple?

I’ve maintained for more than a year that settlement is 💯 dependent on whether the @SECGov must turn over the Hinman speech drafts, edits, emails and comments thereof.

https://twitter.com/jayvthegreat/status/1568376650093535237

Other than having to produce the emails and drafts, another event that could facilitate a settlement is if the SEC receives a disfavorable decision in the @LBRYcom case.

I’ve become more convinced that there will be no settlement unless one or both of those things happen.

First of all, my opinion regarding settlement is no better or more relevant than anyone else’s opinion. The fact that I’m amicus counsel places me in no better position to speculate than anyone else. I’m just sharing my observations b/c I’m receiving many emails and DMs asking.

On January 1, 2021, only 9 days after the Ripple case was filed, I filed the Writ of Mandamus and stated in the Petition that the lawsuit 🆚 Ripple - alleging ALL #XRP are illegal securities - made no sense unless it was filed for one of the following reasons:

1) The lawsuit was personal and a form of political revenge from Clayton;

2) The lawsuit was a weapon to slow adoption and filed for personal gain in order for a select few to benefit financially; or,

3) The lawsuit was filed w/ such over-broad and sweeping allegations (ie claiming secondary market #XRP traded independent of @Ripple are also securities) as a form of regulation by enforcement w/ the intent of coming after all of crypto - a jurisdictional land grab by the SEC.

@GaryGensler and the @SECGov are not going to settle until the political risks outweigh the political benefits. Right now, I think Gensler believes that he doesn’t have much to lose by not settling.

In fact, if the SEC were to win Summary Judgment in both the @LBRYcom and @Ripple cases, it would provide Gensler the validation that most tokens are securities and justification that they must be regulated by the @SECGov.

Right now the political environment seems to favor the @CFTC as the regulator of choice for Crypto. @POTUS’s Executive Order gave limited input or jurisdiction to the SEC. Republicans in the @FinancialCmte and Senate favor the CFTC. @SenLummis @SenGillibrand bill favors CFTC.

If Gensler were to get a victory in the LBRY case and the Ripple case, he might be able to swing political sentiment towards the SEC. He could say: “two federal judges agree that these tokens are securities.”

If Judge 👩‍⚖️ Torres concludes #XRP is a security, Gensler and the SEC will sound like today’s #XRPHolder. For two years we’ve been saying to the Crypto World that if #XRP is a security, then every Altcoin in existence w/the exception of a few are also securities (including #ETH).

SEC REFUSED to settle LBRY. @jeremykauffman offered EVERYTHING - except registering today’s #LBC a security. He offered to dissolve the LBRY company and sell his assets at auction. The SEC even conceded that the majority of today’s LBC purchasers are USERS, but REFUSE to settle.

Ripple offered to settle before the lawsuit was filed and agreed to pay a fine and penalties related to sales in the early years AND w/the SEC not agreeing to give clarity for today’s #XRP. In other words, Ripple would pay a substantial amount of 💰 and live w/the status quo.

BUT THE SEC REFUSED.

Furthermore, acting as temporary Chairwoman of the SEC, @SECHerrenLee discontinued the use of conditional settlement offers. IMO, that was a decision directed at hindering any potential settlement with Ripple and other Crypto platforms.

Think about it: Why would you do away with a practice that helps facilitate settlements?

With the Ripple and LBRY cases pending, the SEC filed the Wahi case claiming 9 tokens sold by these INDIVIDUALS are securities. 🤔

Then comes the filing of the @dragonchain case.

The CEO of @dragonchain, after spending $2-4M in legal fees over a 4 year investigation, was told the investigation was over and he was free. On the eve of the statute of limitations expiring, no longer represented by counsel, the SEC filed the case claiming #DRGN is a security.

There are cases now pending in the first, second and ninth circuits, in addition to Wahi. Gensler has made clear that the exchanges are next, as I predicted almost a year ago. A plan is being executed, step by step.

Here is a breakdown of the scenarios that will dictate a settlement 🆚 a decision on summary judgment.

Scenario One:

SEC receives a victorious ruling from Judge Torres overturning Judge Netburn’s Order that the SEC must turn over the emails, comments, drafts and edits.

Result:

No settlement. Summary Judgment Decision.

Odds of Scenario One happening: 5%

Scenario Two:

Judge Torres Affirms Judge Netburn’s decision and orders the documents turned over.

Result:

The SEC seeks certification for an interlocutory appeal to the 2nd Circuit. I don’t believe Judge Torres will certify. The SEC seeks a Writ of Mandamus.

A lot depends on timing. If Judge Torres’ ruling that the documents must be turned over is very soon, it’s possible the SEC’s delay tactics could run out of time by the end of the year, forcing a settlement. If her ruling takes a long time, the daly tactics run the 🕰

If the LBRY decision comes down as a complete victory for the SEC, it bolsters Gensler’s confidence. If the SEC loses LBRY outright, it favors a settlement w/ Ripple. Get a big settlement number without risking a huge loss and continue terrorizing and extorting other platforms.

Conventional wisdom is that if LBRY can’t get a total victory, we hope the Judge splits the baby and says specific sales to an investment club when the platform had only a few videos and users was a securities offering but the token today is not a security.

Everyone needs to accept the fact that if the Ripple or LBRY cases were ONLY about enforcing securities laws, the cases would have settled long ago. This is about Gensler crushing the Crypto market in an effort to slow down adoption so that the incumbents can get a bigger slice.

Almost a year ago, I tweeted out @BrianBrooksUS could settle the Ripple #XRP case in 15 mins and then spend more time deciding what to eat for lunch. Read how Brian responded.👇

I hope I’m wrong and I’m grossly underestimating the chances for a settlement.

https://twitter.com/johnedeaton1/status/1469077188448296969