- XRP investors have filed a petition against the SEC and its lawsuit against Ripple at the U.S. District Court of Rhode Island.
- The petitioners are asking for XRP to be classified as a non-security and call the SEC’s lawsuit harmful to investors.
The lawsuit filed by the Securities and Exchange Commission (SEC) against Ripple Labs has hit XRP investors especially hard. Since the lawsuit became known, there have been countless delistings of XRP for US customers on cryptocurrency exchanges worldwide and a massive outflow of investor capital. As a result, the XRP price has tanked by more than 50% within less than 14 days.
However, not all XRP investors want to put up with this, who see the SEC’s decision to file a lawsuit against Ripple as an illegal action. Several XRP investors have filed a petition against the SEC and its new chairman Elad Roisman at the US District Court of Rhode Island. In a total of 96 pages, the petitioners outline why XRP is not a security under U.S. law.
Petition against the SEC’s action against Ripple Labs
The XRP investors claim that the SEC’s decision does not follow its mission statement to “protect investors, promote fairness and share information about companies…to help investors make informed decisions and invest with confidence.” Rather, former Chairman Jay Clayton has done the opposite:
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 multi-billion-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.
The petition also alleges that the SEC has been inactive for over 7 years. During that time, a resolution could have been reached with executives. However, this did not happen, the petitioners claim, which is why investors are now suffering billions of dollars in “unnecessary” losses. According to the petition, Jay Clayton “acted with improper motives” and caused irreparable harm to Ripple Labs and XRP.
Arguments why XRP is not a security
One of the first arguments as to why XRP is not a security is the SEC’s classification of Bitcoin (BTC) and Ethereum (ETH) as non-securities. The petitioners argue that what is now still the fifth largest cryptocurrency by market capital is equally traded on hundreds of exchanges and “used as a currency by as many as 150 third-party vendors.”
In addition, Ripple has become “the largest challenger to SWIFT,” offering instant cross-border payments using XRP. In this regard, the petition also cites Acting Director of the Office of the Comptroller of the Currency (OCC) Brian Brooks, who publicly stated that the government should use existing private companies like Ripple and their technology to replace the SWIFT system.
OCC Brian Brooks stated publicly that in the U.S. there are too many agencies in finance and banking. He openly asks the question “Do we think it’s best for the Government to build a CBDC or utilize the private sector, which is already built?” Brian Brooks, without question was discussing XRP and the XRP Ledger (XRPL). There is no doubt it was XRP that he was referencing because he stated that the technology to build a CBDC was “already built”, but that the only issue was with a lack of regulatory clarity.
Ripple recently unveiled a plan to host CBDCs along with the XRP token. According to the plan, the XRPL could host CBDCs for both public and private entities that could customize CBDCs according to their needs.
You can find all the other reasons the petition cites in the official document.