The Securities and Exchange Commission (SEC) wants to block XRP holders from aiding in Ripple’s defense, and exclude attorney John E. Deaton from any further involvement in proceedings.
On July 19 it submitted its official objection, where the regulator opposed the decision to recognize 1,746 XRP holders as “amici curiae” along with attorney John E. Deaton.
Deaton has 3,252 affidavits signed by the token holders, somehow proving that they are victims of the SEC’s lawsuit against Ripple as a result of lost revenues.
Holders said in the affidavits that they either did not assume legal responsibility for purchasing XRP, they bought the tokens for utilitarian and not for investment, or they did not buy based on promises made by the company and its councils.
However, in its objection to XRP holders, the commission claimed that they are trying to work outside of strictly legal issues. The SEC wrote:
“Movants do not propose briefing on legal issues. Instead, they wish to present arguments based on 3,252 affidavits “attesting” to certain facts.”
The commission has mentioned alleged pressures by Deaton against former SEC Chairman Jay Clayton as reasoning to dismiss him as amicus. The SEC included a redacted letter dated June 7 to Judge Torres that mentions a YouTube video from 2021 in which Deaton stated he “might have to walk over and slap the [profanity] out of former SEC Chair Jay Clayton.”
The XRP holders and Deaton as amici are addressed to submit a public reply to the SEC’s objection by July 25.
The SEC has alleged in an ongoing court case started in 2020 which started in 2020 that Ripple and its executives Brad Garlinghouse and Christian Larsen sold XRP as unregistered securities.
Deaton has claimed that the SEC has been erratic with its application of the law against Ripple, Garlinghouse, and Larsen. On a July 19 tweet thread, the lawyer explained that if the SEC truly thought XRP was a security, it would have filed an injunction against Ripple and issued a cease-and-desist order against the two executives and Jed McCaleb from selling their tokens.
The consequence of this case could fix whether XRP is a security. If the judge rules in favor of the SEC, it could be the example the commission needs to follow legal action against other crypto projects that sold tokens similarly to Ripple.
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