- The Securities & Exchange Commission urged the court to disallow XRP holders from intervening in the Ripple case.
- Ripple suggested that there could be a role for XRP holders even if the intervention gets rejected.
- Attorney John Deaton claims that other cryptocurrencies could be on the line if the SEC highlighted XRP as a speculative investment.
Following last week’s intervention attempt by attorney John E. Deaton on behalf of over 10,000 XRP holders in the US Securities & Exchange Commission (SEC) v. Ripple case, the two parties’ response has shed new light on the future of cryptocurrencies in the country.
SEC claims intervention could cause complexity and confusion
After being denied the same motion two weeks ago, attorney Deaton refiled his letter to intervene in the lawsuit, representing over 10,000 XRP holders this time. According to attorney Deaton, Ripple’s lawyers suggested that there could be a role for XRP holders even if the intervention in the case gets rejected.
In a March 26 letter to Federal Judge Analisa Torres, Jorge G. Tenreiro, senior trial attorney at the SEC, urged the court to prevent XRP holders from intervening in the SEC v. Ripple case. The SEC cited an XRP investor, Vladi Zakinov, who filed a class-action lawsuit against the blockchain company in June 2018 who would need to join the case with other crypto holders who claim the token was sold as an unregistered security.
The SEC further argued that by allowing Deaton and the XRP holders he represents to intervene in the case, this would cause an “avalanche” of claims and “near certainty of due delay, complexity, and confusion.”
While the SEC is claiming that an avalanche of people would be able to intervene in the case if the court ruled in favor of the XRP holders, Deaton claims that only three other people have sued Ripple and that no class-action has been certified.
Although Deaton has not spoken to Ripple or its lawyers regarding the latest developments, Ripple’s lawyers emphasized that their position is conditional based on the SEC’s response. So far, Ripple has taken a neutral stance on the issue but claims that the regulator needs to clarify the ambiguity of whether the lawsuit would affect the secondary XRP market.
Deaton never claimed to have lost money on XRP
According to Deaton, if cryptocurrency exchanges ask the SEC for clarity based on what was said at the discovery hearing that took place on March 20, he is confident that the securities regulator would issue no-action letters to allow XRP to be relisted and traded. He highlighted that the SEC did not seek a preliminary injunction to stop Ripple from selling its tokens and added:
There is nothing stopping Ripple from selling #XRP to fund operations. If the SEC informs the exchanges that they can trade #XRP and #XRP doubles from here, Ripple has twice the money to defend the case and, yes, legal fees are considered operational expenses.
Citing a previous FXStreet article, the SEC argued that Deaton’s intention behind the intervention is to double XRP’s price after cryptocurrency exchanges “reinstate speculative trading” of the digital asset. However, attorney Deaton stated in a January tweet that excluding the suppression in price due to the SEC filing, he has “never even claimed to have lost money on XRP.”
The lawyer highlighted the “absurd claim” that some XRP holders bought the digital asset as a speculative investment, which “proves” that Ripple sold XRP as an investment contract. Citing the SEC’s objection to his pre-motion letter, attorney Deaton further hinted that the Ripple case is a threat to all cryptocurrencies, highlighting that other digital assets, including Bitcoin and Ether could also be speculative investments according to the SEC.