Ripple and XRP holders might be stuck for another year

John Deaton stressed his belief the XRP lawsuit is being used as a weapon and the SEC is likely to do all it can to delay the production of the documents, which might include filing a Writ of Mandamus and an interlocutory appeal to the 2nd Circuit Court of Appeals.

John Deaton, the attorney representing more than 65,000 XRP holders in the SEC v. Ripple lawsuit with the Amicus Curiae status, has turned to Twitter to share what he called the worst thread he has ever written.

Replying to the most common question among the XRP community amid the systematic delays in the case – “How long the SEC v. Ripple case will take to resolve either by settlement or by judgment” – John Deaton admitted he placed a lot of emphasis on the DPP ruling.

If the SEC is successful in delaying the production of the documents pertaining to the emails and drafts of Hinman’s speech and meetings with third parties, the case could last another year. XRP holdings should remain frozen in US-based exchanges throughout that time.

“I said if the Judge pierced the deliberative process privilege and ordered the SEC internal documents produced, we could see a settlement w/in 90 days thereof. I also said if the judge rules the documents don’t have to be produced to Ripple, I believe the case will go to Summary Judgement; and, possibly, a jury verdict”, he explained.

The judge gave a mixed ruling, with the SEC being able to keep most of the documents from being produced, but Ripple scored two significant victories:

  1. the emails with ex-SEC Director Hinman’s draft speech were deemed not privileged and ordered to be turned over;
  2. the notes taken by SEC lawyers regarding meetings with third parties not associated with Ripple must also be produced and are very likely to include exchanges with ConsenSys, Joseph Lubin from Ethereum, and other relevant material.

The judge also ruled that any notes from SEC attorneys that reflected their mental impressions could be redacted by the plaintiff before handing them over to Ripple.

“If the emails and notes contain exculpatory evidence for Ripple or damming evidence against the SEC, it could lead to a settlement but until the SEC is FORCED to turn them over – it won’t.”

The court’s decision to grant the SEC’s request to file a motion for the judge to reconsider her DPP ruling was a hard blow to the expectations of XRP holders that have been forced to stay on the sidelines with their assets frozen for more than a year already.

“Today’s decision on allowing the SEC to file a motion to reconsider is terrible news related to the timing issue. Without question, today’s decision will cause more delay”, John Deaton continued as he explained how it’s likely to play out.

“The motion papers will all be served on February 25. It is fair to assume the Judge will likely take 1-2 weeks to issue a ruling. That brings us to mid-March. The losing side then has 14 days to file objections before Judge Torres.

“There is no doubt whoever loses will appeal to Judge Torres. Before all the paperwork is filed, related to the objections, it will, at best, be mid-April. How long will it take for Judge Torres to rule on the objections? I don’t know, but 30 days is certainly fair to assume.

“If she does take 30 days, it brings us to mid-May. Although expert depositions will be over on Feb. 28, how does Ripple finalize its Summary Judgement motions not knowing what these documents contain?” 

John Deaton added that Ripple might need to seek leave from the Court for an expert to supplement a report incorporating some of these documents, which brings oral arguments to the end of May.

Even if both Judge Netburn and Judge Torres rule that the Hinman emails must be turned over to Ripple, the SEC might still attempt to file an interlocutory appeal to the 2nd Circuit Court of Appeals although such interlocutory appeals for matters related to discovery motions are generally not allowed, he explained.

“But will that stop the SEC from attempting it, thus, causing another 30-60 day delay? Believe it or not, the SEC could attempt to file a Writ of Mandamus before the 2nd Circuit.”

If this turns out to be true, we might only be seeing the end of the DPP chapter in July or even later, which inevitably pushes the case further back. Earlier this month, attorney Jeremy Hogan predicted the lawsuit would be over in August-September, but that was before the SEC’s intention to request the court to reconsider its ruling on the deliberative process privilege.

At the time, Hogan expected a five-month briefing schedule before the judge even gets the case to make a decision, which could take about three months. If we take the DPP chapter into account, that could mean the case won’t be over before 2023.

He added that the parties can stipulate a shorter time frame and the judge would agree with that. “But do you think the SEC would agree to shorter time frames? Me neither!”