Legal Expert Highlights How XRP Holders Influenced Outcome of Ripple Lawsuit

Pro-XRP attorney John Deaton has congratulated XRP holders for playing a meaningful role in the SEC’s lawsuit against Ripple. 

Attorney Deaton made the remarks as the XRP community celebrated the third anniversary of Judge Analisa Torres’ landmark July 13, 2023 ruling, which held that XRP, in itself, is not a security.

Court Recognizes XRP Holders’ Arguments

According to Deaton, one of the strongest indications that XRP holders influenced the outcome is Judge Torres’ decision to cite the amicus brief he filed on behalf of thousands of XRP investors.

However, Deaton acknowledged that this fact alone does not conclusively prove the community changed the outcome, as the judge also referenced several other amicus briefs submitted during the litigation.

Nonetheless, he placed greater emphasis on the court’s reliance on nearly 4,000 affidavits submitted by XRP holders. Although the parties filed thousands of exhibits throughout the multi-year case, Judge Torres cited only a limited number of them in her summary judgment ruling. Among those selected were the XRP holder affidavits.

Notably, the affidavits provided direct evidence supporting Ripple’s argument that many XRP purchasers did not rely on the company’s managerial efforts to generate profits, an important factor under the Howey test.

LBRY Arguments Also Shaped the Court’s Analysis

Furthermore, Deaton pointed to Footnote 16 of Judge Torres’ opinion, where she cited an exchange from oral arguments in a separate LBRY case.

According to Deaton, the referenced discussion involved his arguments before the federal judge regarding secondary market sales of digital assets. 

He believes the citation shows that Judge Torres considered broader legal principles beyond the Ripple case when evaluating whether secondary market transactions should qualify as securities transactions.

Push for a Formal Declaration Labeling XRP as Non-Security

Deaton also highlighted one of the central requests in his amicus brief. Specifically, he urged the court to explicitly declare that XRP itself is not a security.

He argued that XRP is simply digital code and that a digital asset’s legal status should not permanently depend on how it is marketed or sold in a particular transaction. To reinforce this argument, Deaton compared XRP to assets such as gold, beavers, condominiums, chinchillas, and orange groves. 

Although these assets have been sold through investment contracts in certain circumstances, the assets themselves have never been classified as securities. Therefore, Deaton maintained that even if Ripple offered XRP as part of an investment contract under specific circumstances, that fact alone would not transform the token itself into a security.

XRP Community Continues to Celebrate Historic Legal Clarity

Meanwhile, the broader XRP community has continued to celebrate Judge Torres’ landmark decision, which delivered long-awaited legal clarity for XRP three years ago.

The ruling established that XRP itself is not a security while distinguishing between different types of Ripple’s transactions. Judge Torres concluded that Ripple’s programmatic sales on cryptocurrency exchanges and certain other XRP distributions did not constitute investment contracts. However, she ruled that Ripple’s institutional XRP sales violated federal securities laws because they qualified as unregistered securities offerings.

Since the decision, Ripple executives have repeatedly praised the XRP community, particularly the thousands of token holders represented by Deaton, for helping shape one of the most consequential legal battles in the digital asset industry.