New York, NY – A recent legal precedent from the Second Circuit could have significant implications for the ongoing legal battles between the Securities and Exchange Commission (SEC) and cryptocurrency platforms Coinbase and Ripple. Attorney John Deaton shed light on this important case, which has caught the attention of Coinbase’s Chief Legal Officer (CLO) Paul Grewal and pro-XRP lawyer Deaton himself.
The case in question is Revak v. SEC Realty, a decision made by the Second Circuit in 1994. Grewal expressed his admiration for this precedent in a recent tweet, emphasizing a key aspect of the decision that questions the SEC’s definition of security in relation to ecosystem access. The Second Circuit ruled that the correlation between a promoter’s efforts and investors’ outcomes does not easily satisfy the Howey test, which is commonly used to determine if an investment qualifies as a security. The court further stated that a common enterprise can only be established when the fortunes of investors collectively depend on the expertise of the promoter.
Deaton, in response to Grewal’s tweet, drew parallels between the Revak case and the ongoing legal disputes involving Ripple, Coinbase, and LBRY. He pointed out that while the LBRY case is in the First Circuit, the lawsuits against Ripple and Coinbase are in the Second Circuit. Deaton argued that these cases, governed by the Second Circuit and the Revak decision, hold significant implications for the outcome of the lawsuits.
Both the Ripple and Coinbase cases have garnered immense attention due to their potential impact on the future of the cryptocurrency industry. The Ripple lawsuit, currently in its final stage, will determine the appropriate penalty for the company’s violation of the law through its institutional sales of XRP. Meanwhile, the Coinbase lawsuit is still in its early phase, with the SEC and Coinbase awaiting the court’s decision on Coinbase’s motion to dismiss the case.
Legal experts, including Attorney James Murphy, speculate that a decision on the Coinbase case will be issued within three months. As the proceedings unfold, it is crucial to closely monitor these cases as their outcomes could shape the regulatory landscape for cryptocurrencies.
It is important to note that this article is for informational purposes only and should not be considered financial advice. Readers are encouraged to conduct thorough research before making any investment decisions.