Exploring the SEC’s Impact on Ripple: Insights from John E. Deaton
In a revealing post on X, renowned attorney and XRP advocate John E. Deaton discussed the complex relationship between the United States Securities and Exchange Commission (SEC) and Ripple’s industry rivals. Deaton suggested there might be a strategic alliance aimed at challenging Ripple and its associated cryptocurrency, XRP.
The Ripple Effect of the SEC Lawsuit
Deaton highlighted the significant repercussions of the SEC’s legal action against Ripple, expressing, “Estimating the full extent of the damage inflicted on Ripple’s business by the SEC’s comprehensive complaint is challenging.” He provided historical insight, reminding us, “Back in 2012, when Ripple’s founders developed XRP, stablecoins were nonexistent, and the cross-border payments market was an untapped opportunity for innovative technology. This potential remains vast today.”
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Strategic Choices in Ripple’s Early Days
Reflecting on Ripple’s formative years, Deaton reminisced about the crucial decision-making process regarding whether Ripple should concentrate on smart contracts or payment solutions. He shared a fascinating anecdote from that era: Vitalik Buterin, Ethereum’s co-founder, was living with Ripple’s then-CTO, Stefan Thomas.
Ultimately, Ripple chose to specialize in cross-border payments. Deaton views this as a strategic decision, especially considering the absence of stablecoins and the immense possibilities of the global cross-border payments market. He remarked, “Given the nonexistence of stablecoins at the time and the enormous size of the international cross-border payments market, their focus made sense.”
Growth and Challenges in Cross-Border Payments
Supporting Ripple’s strategic focus, Deaton highlighted data showcasing the meteoric rise of cross-border payment flows. By 2022, these transactions exceeded $150 trillion, representing over 96% of the total cross-border payment volume, with projections estimating a surge to $250 trillion by 2027. This surge is fueled by the growth of global trade, the rise of international e-commerce, and increased global mobility among individuals and enterprises.
Deaton also emphasized significant milestones that initially propelled XRP’s adoption. He noted, “When Coinbase listed XRP in February 2019, they promoted both XRP and USDC for their ability to facilitate international money transfers swiftly and at minimal cost. Moreover, in June 2019, MoneyGram began leveraging XRP.”
The Turning Point: SEC Lawsuit
The narrative took a dramatic shift when the SEC lodged a lawsuit against Ripple in December 2021. “Following the SEC’s lawsuit, Coinbase removed XRP from its platform, and MoneyGram transitioned from using XRP to adopting XLM,” Deaton recounted.
Critiquing the SEC’s stance, Deaton questioned, “Is there truly a legal distinction between MoneyGram’s use of XLM versus XRP?” He highlighted the irony in the SEC’s actions by stating, “Jed McCaleb, the founder of XLM, is also a co-founder of Ripple and XRP!”
Allegations of Overreach and Conflict
Deaton characterized the SEC’s complaint as excessively broad, describing it as “arguably the most excessively comprehensive complaint ever filed by the SEC.” He accused the SEC of potential conflicts of interest, noting that individuals involved in the lawsuit subsequently aligned themselves with Ripple’s competitors. “Those who advocated for the case against Ripple later collaborated with or joined Ripple’s competitors,” he asserted.
Addressing doubts about his motives, Deaton clarified his financial interests and independence: “As revealed in FEC filings, 80% of my net worth is in BTC. Additionally, when Eleanor Terrett and Charles Gasparino covered the case in November 2021, they wrote: ‘Deaton is certainly no Ripple enthusiast. He has criticized Ripple for selling approximately $800 million…’”
He concluded, “However, when examining the circumstances surrounding this case, including significant conflicts of interest and the fact that those behind the lawsuit later supported or worked with Ripple’s competitors, you don’t need to be a fan to acknowledge the issues.”
As of the latest update, XRP is trading at $2.12.
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