Introduction
In a recent discussion, attorney John Deaton emphasized the vital role of 75,000 XRP investors in assisting Ripple’s leadership during its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). In a post dated July 12, Deaton commended Ripple’s CEO Brad Garlinghouse and chairman Chris Larsen for their decision to refuse an early settlement with the SEC, a move he implied was made possible thanks to support from the XRP community.
Criticism of the SEC
Deaton criticized the SEC’s legal team, insinuating they exerted undue pressure to prompt a quick agreement. His remarks were in response to Garlinghouse’s earlier reflection that the company contemplated ceasing operations following the SEC’s enforcement action initiated in December 2020.
Comments from Ripple Executives
Deaton further engaged with comments made by David Schwartz, Ripple’s co-founder, who remarked that external legal advisors previously deemed Ripple “unsavable.” Schwartz noted that naming executives individually in the SEC’s suit might have motivated them to secure separate settlements for personal protection. Before the lawsuit, former SEC chair Jay Clayton had indicated that targeting individual executives could sometimes be a strategic choice, a point that was echoed during a subsequent discussion featuring Joe Grundfest.
Financial Implications
Ripple has reportedly spent around $150 million defending against the SEC allegations while working to safeguard hundreds of jobs, according to Garlinghouse. Deaton became involved in the case after mobilizing XRP holders who opposed the SEC’s sweeping characterization of the token. A federal judge later granted Deaton the ability to act as an amicus, allowing him to advocate for holders who participated in various transactions involving XRP.
His group maintained that trades on the secondary market should not be treated in the same manner as institutional sales, presenting testimonials that underscored different motivations for purchases unrelated to investment speculation.
Community Support and Legal Strategy
Further supporting Deaton’s claims, Ripple’s deputy general counsel Deborah McCrimmon mentioned that community contributions had significantly reduced the company’s legal expenses. Deaton argued that testimonies from XRP holders illuminated that many purchasers did not depend on Ripple’s promises, thereby complicating the SEC’s position.
However, it’s crucial to note that the court did not conclude that the mere presence of 75,000 holders dictated the outcome of the case; rather, it was part of a broader legal narrative involving contracts, marketing practices, and expectations set by buyers.
SEC’s Demands and Ethical Concerns
Additionally, Deaton criticized the SEC’s endeavors to procure extensive personal financial records from Garlinghouse and Larsen, describing those demands as intimidation tactics. A magistrate had previously denied such broad requests, ruling that the SEC had failed to prove their relevance. While the executives had complied with requests related to their XRP transactions, Deaton referred to some members of the SEC’s legal team as ethically compromised.
He also pointed to sanctions imposed on the SEC in an unrelated case, signifying the agency’s reputation for misleading practices—though this had no direct bearing on the Ripple litigation.
Legal Outcomes
The overall legal battle yielded mixed results: in a 2023 decision, Judge Analisa Torres ruled that Ripple’s programmatic XRP sales on public exchanges did not amount to securities transactions, whereas institutional sales did violate securities laws. After the SEC withdrew its claims against Garlinghouse and Larsen prior to trial, the two executives faced no further personal liability.
Following a civil penalty of $125 million against Ripple, both parties sought to renegotiate the penalty and injunction terms, but these attempts were thwarted in Torres’s court. Ultimately, both sides abandoned their appeals in August 2025, cementing the initial judgment’s outcome.
Conclusion
Deaton’s assessment of the situation as a “win” is a reflection of this complex legal landscape, tinted by the nuances of favorable rulings amid an overall contentious process.
