John Deaton Says SEC Lawsuit Affected XRP Adoption

Despite Ripple scoring a win in the ongoing lawsuit with the US Securities and Exchange Commission (SEC), some members of the community believe the legal battle caused damages for the firm and its native token.

According to lawyer and founder of CryptoLaw, John Deaton, who also represents thousands of XRP holders, the SEC lawsuit affected potential mass adoption of XRP in the last three years.

Counting the Losses

John Deaton took to X (formerly Twitter) on August 22 to detail the level of adoption XRP enjoyed before the SEC lawsuit, stating that the token may have seen greater adoption if the regulator never filed charges.

Deaton mentioned that outside of the blockchain company Ripple, major crypto exchange Coinbase and money transfer giant MoneyGram were one of the biggest adopters that utilized XRP for cross-border payments.

The lengthy X thread particularly focused on Coinbase’s promotion of XRP and the regulatory steps carried out by the exchange before listing Ripple’s native token on its platform.

According to the lawyer, Coinbase met with the SEC in 2019, informing the regulator that XRP was not a security after conducting a stringent assessment. The exchange sought the SEC to determine if the latter had any opposition to its assessment and also to prevent running afoul of securities laws.

Meanwhile, as stated by Deaton, the American securities regulator neither refuted Coinbase’s evaluation of XRP nor discouraged the exchange, leading the company to list the token on its platform. Deaton also argued that tens of thousands of US residents bought XRP following Coinbase’s promotion of the asset.

Things, however, took a different turn in December 2020 when the SEC sued Ripple for selling unregistered securities worth $1.3 billion. Consequently, companies like Coinbase, who formerly touted XRP, delisted the token from its platform, with several other exchanges following suit.

MoneyGram, which previously struck a partnership deal with Ripple in 2019 to use XRP for cross-border payments, ended the partnership agreement with the blockchain company a few months after the SEC lawsuit, with Ripple stating that it was a joint decision.

Would Coinbase Have Invested in Ripple?

While Ripple won against the SEC according to a recent ruling that declared XRP as not a security, Deaton believes the lawsuit harmed XRP’s adoption and possibly affected potential major developments in the last three years.

Reacting to the latest news about Coinbase purchasing a stake in stablecoin issuer Circle, the XRP holders’ lawyer asked whether the crypto exchange may have invested in Ripple instead if the lawsuit never happened.

We know the rest. It is so clear the lawsuit was used as a weapon. I said it only 9 days after the Ripple lawsuit in a federal pleading, when I filed the Writ of Mandamus against the SEC, and all the evidence uncovered during the last 3 years proves it to be true.

— John E Deaton (@JohnEDeaton1) August 22, 2023

Although Coinbase relisted XRP after the historic ruling, MoneyGram did not renew its partnership with Ripple. Instead, the international payments company formed a new relationship with Ripple’s rival Stellar Development Foundation (SDF) in October 2021 to enable transfers with the USDC stablecoin.

In August 2023, SDF bought a minority stake in MoneyGram.