The U.S. Securities and Exchange Commission (SEC) attempts to stop XRP holders from joining the on-going lawsuit as third parties.
In a letter to Judge Analisa Torres, the SEC’s Senior Trial Attorney Jorge Tenreiro argued that XRP holders had not clarified their actions. What’s more, Tenreiro states consolidation/coordination of claims is statute-barred without the SEC’s say-so.
“Movants do not explain what claims they would assert against whom in this action if the Court were to permit them to intervene. But Congress has barred by statute the consolidation or coordination of claims without the SEC’s consent, and sovereign immunity bars Movants’ claims against the SEC. That alone precludes Movants’ proposed intervention.”
XRP Holders Want Representation
The ongoing legal action against Ripple has become a complex case involving multiple motions that each requires judgment. In this latest example, the SEC was responding to a pre-motion letter filed by Attorney John Deaton.
Deaton called on Judge Torres to allow intervention by over ten thousand XRP holders. This would ensure the case considers the interests of all stakeholders, making certain those interests are “fully and vigorously defended.” He argues this is necessary as neither the SEC nor Ripple represents the holders of XRP.
“Allowing us to intervene is appropriate because neither party in the case currently represents the holders and users of XRP. A key aspect of Ripple’s defense will be to demonstrate that they have no duty or obligation to XRP holders, and given the SEC’s actions thus far, we can’t expect it to even consider the interests of XRP holders.”
While the SEC rejects this argument, by contrast, Ripple’s attorneys have expressed no objection to the intervention by XRP holders.
THE @SEC_Enforcement OBJECTS TO #XRPHOLDERS’ VOICES BEING HEARD IN A CASE IT ALLEGEDLY BROUGHT ON OUR BEHALF @Ripple @bgarlinghouse & @chrislarsensf TAKE NO POSITION AT THIS TIME BUT AGREE WE SHOULD BE PERMITTED TO PROCEED WITH OUR MOTION https://t.co/dpwAD8zuKD
— John E Deaton (@JohnEDeaton1) March 27, 2021
SEC Running Out of Room to Maneuver
Attorney Jeremy Hogan, who is not a party to the case, assessed the intervention saying this spells trouble for the SEC.
A significant component of the SEC’s case against Ripple is the allegation that XRP sold by Ripple, in the present day, are unregistered securities. This implies all XRP constitutes unregistered securities, including those held by XRP holders.
Hogan makes the point that the SEC’s purpose is to protect investors. But ten thousand XRP holders came forward to say they have been harmed, not protected, by the SEC’s actions. This plays into Ripple’s strategy of demolishing the SEC’s case on the grounds they failed to consider the secondary market.
“The SEC just wants some vague ruling that sales constitute sales of unregulated securities, and give the Judge some vague promise, ‘don’t worry Judge, we won’t be going after the secondary market of course not, we’re the good guys, we’re sticking up for the small people.’”
By objecting to the intervention, the SEC is somewhat corned because it shows their allegations are ill-defined. Is XRP inherently a security? Or, is the lawsuit about sales by Ripple and Garlinghouse only?
Source: XRPUSD on TradingView.com