A group of XRP investors has filed a petition in a US court to try and force the US Securities and Exchange Commission (SEC) to exclude its claim that tokens owned by investors are securities.
This follows a monumental lawsuit filed by the SEC in December 2020 against Ripple Labs, its CEO Brad Garlinghouse and co-founder and executive chairman of the board Chris Larsen for allegedly conducting an unregistered security offering of the sale of XRP tokens from 2013 onwards.
The lawsuit has caused runctions in the cryptocurrency space. Several cryptocurrency exchanges in the United States have taken decisions to delist or suspend the trading of XRP on their platforms. Coinbase in particular is facing a lawsuit itself for allegedly receiving commissions from illicit XRP sales going on the basis that the tokens are deemed to be securities.
Ripple CEO Brad Garlinghouse maintains that XRP is not a security and has vowed to take the SEC on in court to prove their case.
Investors take matters into their own hands
According to legal documents filed in the Rhode Island district court on January 1, investors are looking to obtain a Writ of Mandamous against the SEC’s lawsuit which currently includes claims that XRP owned by holders are also securities.
The Writ is essentially a court order that should compel a person to execute a duty that they are legally obligated to. Of significant importance is the power of a Writ of Mandamous to order a lower court or government agency ‘to complete a duty to uphold the law or to correct an abuse of discretion’, as per the definition provided by Investopedia. They are also deemed to be useful because they can be executed before a court case has been complete.
The investors are looking for the order to be maintained as a class action against the SEC. The class could potentially be made up of hundreds or thousands of XRP holders that are looking for relief in the aftermath of the SEC filing and the subsequent crash in value of XRP tokens across the cryptocurrency markets.
Investors claim outgoing SEC Chairman Clayton failed to protect investors
The petition makes an impassioned plea that acting SEC chair Elad Roisman change the SEC’s filing against Ripple, Garlinghouse and Larsen “to exclude the claim that the XPR owned by Petitioners constitute securities”.
The investors also fired shots at Clayton’s actions against XRP as a whole, which had a knock-on effect that saw thousands of investors incur massive losses as a result of the market reactions:
“As chairman of the SEC, it was Jay Clayton’s (Clayton) fiduciary duty to enforce the SEC mission statement. Instead of protecting investors and sharing information to help investors make informed decisions the respondent knowingly and intentionally caused multibillion-dollar losses to innocent investors who have purchased, exchanged, received and/or acquired the digital asset XRP, including the named petitioners, and all others similarly situated.”