On the social media platform X, Crypto attorney John Deaton outlined the U.S. Securities and Exchange Commission's (SEC) demand for a $770 million fine from Ripple due to alleged securities regulation breaches.

After facing multiple legal setbacks against Ripple, the SEC has advanced with this hefty fine proposition. Just recently, the commission withdrew its accusations against Ripple's CEO Brad Garlinghouse and its co-founder Chris Larsen. Additionally, District Judge Analisa Torres dismissed the SEC's effort to overturn her verdict on XRP earlier this month. Deaton shared his views:

"People should recognize that the penalty phase essentially initiates another lawsuit involving further depositions, interrogations, document requests, emails, financial statements, contracts, and ODL [on-demand liquidity] activities," Deaton stated. "I foresee Judge Torres' final ruling not emerging until late summer at the soonest. In fact, the appeal process might extend up to a year."

Deaton drew attention to the LBRY case, a platform built on blockchain for file sharing and payments. Initially, the SEC demanded $23 million from LBRY. He highlighted, "Only after another eight months of legal proceedings did the court impose a $130K fine."

Furthermore, Deaton predicts that the SEC's ongoing lawsuit against crypto exchange Coinbase (Nasdaq: COIN) will influence the ultimate sum Ripple might be obligated to pay to the regulator. He speculates that if Coinbase successfully dismisses the SEC's suit, the SEC may need to reconsider its stance against cryptocurrencies and potentially negotiate a resolution with Ripple. On the contrary, if Coinbase's motion to dismiss is denied, Deaton envisions "no compromise."

With the "Coinbase motion's oral hearing" slated for January 17, 2024, Deaton remarked, "A decision is expected within 60 to 120 days following that." He stressed:

Deaton also expressed his conviction that Ripple could significantly lower the proposed $770 million penalty. "This case isn't about fraud," he emphasized. "The objective is to determine a fitting penalty for Ripple's actions related to the sale of what's deemed as unregistered securities. However, it's worth noting these were sold in the backdrop of a novel asset that other federal bodies have labeled as 'virtual currencies'."