SEC says XRP holders are ‘no friend to the court’ in case against Ripple

Rick Steves

The regulator claimed XRP holders are too partial to serve as Amici, and their participation as “Elevated Amici” who are exempt from discovery prejudices the SEC. Lastly, the financial watchdog says XRP holders inappropriately seek to expand the issues in this case.

Morgan Stanley sees Blockchain's best use for Securities

The need for regulatory clarity has become the one thing everyone on both sides of the SEC v. Ripple lawsuit agrees with.

Whether the regulator will pursue that objective ASAP or not is something that remains to be seen. If that happens, it’s been suggested that a settlement deal should see the light of day within the next two weeks.

Either way, the case is happening now and motions are being filed on every turn. Most recently, the SEC filed an objection to the Ripple co-founders’ motion to dismiss the case against them.

In the document, the SEC basically doubles down on their guilt, pointing to Chris Larsen’s explicit knowledge that XRP could be considered a security and Brad Garlinghouse’s marketing of XRP as an investment as he “understood the nature of the asset”.

Prior to that, Ripple had put the SEC to shame in the latest legal round by exposing their omissions and misrepresentation of the Judge in the SEC’s motion to strike Ripple’s lack of due process and fair notice affirmative defense.

A few days ago, the SEC filed another objection to XRP holders’ Motion to Intervene, arguing they can offer nothing beyond what defendants can provide and have provided to the court.

The regulator also claimed XRP holders are too partial to serve as Amici, and their participation as “Elevated Amici” who are exempt from discovery prejudices the SEC. Lastly, the financial watchdog says XRP holders inappropriately seek to expand the issues in this case.

James K. Filan, a Connecticut-based lawyer connected to the XRP holders reminded the SEC’s mission statement, which among other things is to “protect investors.”

“The SEC has argued from the beginning of this enforcement action that XRP is a security, thereby arguing that XRP holders are actually XRP ‘investors'”, Mr. Filan said.

“In its latest filing, it attacks XRP holders. It says “[b]ecause Movants are not seeking to appear as objective “friends of the court,” but rather to advance their own interests—to pursue claims against the SEC Defendants’ request that Movants appear as amici should be denied.”

“It’s clear that the SEC is antagonistic toward XRP holders and has no intention of protecting them or advancing XRP holders’ interests. This leads to only one conclusion: The enforcement action brought by the SEC has never been intended to protect anyone or anything. Its only objective has been to destroy XRP, XRP holders, and Ripple. The SEC is horribly misguided and needs to end this travesty”, he added.

In response to the SEC’s opposition, XRP Holders filed a new Memorandum of Law stating “the SEC’s opposition to intervention is riddled with red herrings, personal attacks, and irrelevant caselaw hoping to distract the Court from XRP Holders’ meritorious request for intervention.

“XRP Holders are not constitutionally or statutorily barred from intervention. They have a protectable interest that could be impeded, if not destroyed, by the disposition and outcome of this case. Moreover, the existing parties do not adequately represent their interest.

“XRP Holders should be allowed to speak for themselves. XRP Holders do not seek to broaden the scope of the SEC’s claims but rather protect their interests and provide the Court with critical information necessary for the fair disposition of this case. If intervention is granted, there will be no delay in the proceedings or adjudication of this case.

“The SEC cannot claim, with credibility, that it will suffer unfair prejudice from intervention. Considering the substantial public interest at stake, intervention will provide this Court with a more complete picture of the issues presented and contribute to a just and equitable adjudication of all claims and defenses.”

Regarding regulatory clarity, the CFTC is watching the lawsuit as it will help to establish the scope of the SEC’s authority in the digital assets space”, said Commissioner Stump.

Also in the context of the SEC’s lack of clarity, XRP holders’ lawyer John E. Deaton said it “doesn’t take an expert to see that plenty is very wrong, very corrupt and very outrageous about the SEC’s lawsuit against Ripple”.

Ripple CEO Brad Garlinghouse has recently said the lack of clarity in U.S. regulation of cryptocurrencies is “frustrating.”

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