Securities.io is committed to rigorous editorial standards. We may receive compensation when you click on links to products we review. Please view our affiliate disclosure. Trading involves risk which may result in the loss of capital.
Table Of Contents
It has been over a year and a half since the US SEC launched its lawsuit against Ripple, the company behind XRP, as well as its executives, accusing cryptocurrency of being a security. However, Ripple has been fighting back strongly, forcing the regulator to find new ways to attack.
The most recent example of this is the SEC’s attempt to prevent XRP holders and supporters from aiding the company’s defense, and even go as far as to bar attorney John E. Deaton from participating in the case moving forward. The regulator submitted an official objection two days ago, July 19th, opposing the decision to recognize as many as 1,746 individuals who hold XRP coins as “amici curiae.” The same objection also mentioned the attorney John E. Deaton.
An accusation against XRP holders
The phrase, amici curiae, or “friends of the court,” essentially marks Ripple holders as individuals who are not a party to the legal case, but are permitted to assist by providing information, insights, or expertise. In this case, they are aiding Ripple’s defense, which is damaging the SEC’s own case against the company.
The attorney Deaton, on the other hand, stood in the SEC’s way by collecting 3,252 affidavits signed by XRP token holders, who are essentially stating that the SEC’s lawsuit against Ripple damaged them, making them the victims due to lost profits. Holders have come out to claim that they did not assume legal responsibility for buying the XRP coin, or that they did not purchase the coins for investment purposes, but rather for utilitarian purposes.
There are even claims that the cryptocurrency purchases had nothing to do with the promises that Ripple and its executives made, which is strongly impacting the SEC’s accusations of Ripple and its leaders misleading the investors.
The SEC, however, objected to this, claiming that the Ripple holders are attempting to operate outside of strictly legal issues. The regulator noted that the 3,252 affidavits are “attesting” to certain facts. As for the attorney Deaton, the Commission mentioned supposed threats by the attorney against the SEC’s former chair, Jay Clayton, as reason enough for him to be dismissed as amicus.
SEC is inconsistent, says Deaton
The regulator did not stop there, however. It also included a letter from June 7th in its objection. The letter was sent to Judge Torres, and it revolves around a YouTube video posted in 2021. In the video, Deaton says that he might have to walk over and “slap the (profanity) out of former SEC Chair Jay Clayton.”
With the new complication, both Deaton and Ripple holders marked as amici will now have until July 25th to submit a public reply to the new wave of accusations coming from the regulator. Deaton has already launched his own accusations against the SEC one day before the objection was submitted, calling the regulator inconsistent with its application of the law against the company and its executives.
The SEC claims #XRP itself is a security and anyone who sells it is violating Section 5 of the Securities Act. The SEC claims @Ripple @bgarlinghouse & @chrislarsensf “enriched” themselves at the expense of investors and it is seeking $1.3B in disgorgement from these defendants. https://t.co/9nJ1iNroth
— John E Deaton (207K Followers Beware Imposters) (@JohnEDeaton1) July 18, 2022
He argued that the SEC would have simply filed an injunction against the company, in addition to issuing a cease-and-desist order against its executives if this was truly about the suspicions of XRP being a security.
To learn more visit our Investing in Ripple guide.
Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.