The principal worry that led lawyer John Deaton, the creator of Crypto Law, to bring a lawsuit against the Securities and Exchange Commission, has been made public (SEC).
Deaton asserts that XRP holders will suffer if the judge overseeing the ongoing litigation between the SEC and Ripple finds in favor of the Fair Notice Defense after identifying XRP as a security. Based on such an event, he continued, he felt compelled to sue the SEC.
“Most likely now, it won’t happen but there was a scenario where the SEC wins but Ripple doesn’t have to pay much. The judge could say XRP was and is a security but Ripple didn’t get fair notice so doesn’t have to pay. XRP Holders get screwed. That fear was one reason I sued the SEC,” Deaton said.
The creator of Crypto Law also said that in this situation, Ripple would have insurance thanks to the Fair Notice Defense. If the blockchain corporation loses “the security” litigation, the move will be put into action.
No American exchange will relist the cryptocurrency, according to Deaton, if the court determines that Ripple did not receive a fair notice and declares XRP to be a security. However, he worries that if such a bad thing happens, American XRP holders will sell the coin through different channels.
“First, I’m not saying it is going to happen – I don’t believe it will – I predict it won’t. But in that scenario, you would have a token deemed a security with Ripple but gives you zero rights or interest in Ripple. No exchange would relist, have to be a dealer broker to sell, etc,” he added.
Read more: Ripple Expands Into France And Sweden With Its ODL Division
Deaton Defending The Interests of XRP Holders
It is important to note that Deaton has filed a lawsuit against the SEC to defend the rights of XRP holders in the Ripple case.
In an August tweet, Deaton asserted that XRP holders had lost $15 billion as a result of the SEC’s decision to classify all XRP, including secondary market sales, as securities as opposed to only Ripple. As a result, XRP was delisted from numerous American cryptocurrency exchanges, including Coinbase and Kraken, which put pressure on the token’s price.
