- The class action lawsuit that John E. Deaton is seeking against the SEC has already been signed by 2,7000 XRP HODLers.
- According to Jeremy Hogan and John Deaton, the legal battle between Ripple and the SEC can only provide regulatory clarity to a limited extent, as this is something that the US Congress must do.
“Crypto Eri” spoke to arguably the most popular lawyers in the XRP community at the moment, John E. Deaton and Jeremy Hogan, in a new video. The latter is known for regularly sharing updates on the current state of the SEC’s lawsuit against Ripple on YouTube, while Deaton is the XRP community’s lawyer and is seeking a class action lawsuit against the SEC.
Deaton reported yesterday that 2,700 XRP HODLers have already signed the letter of intent to join the lawsuit against the U.S. Securities and Exchange Commission (SEC). He is currently still seeking individuals who owned and currently own XRP as of December 22, 2020.
As of yesterday, we have over 2700 #XRPHOLDERS that have indicated an intent to participate in an action against the SEC (although the SEC is already blaming the exchanges). My law firm receives emails hourly from people who are just learning of it. https://t.co/oTlS7iWVIp
— John E Deaton (@JohnEDeaton1) March 6, 2021
Basically, all XRP holders worldwide can participate in the lawsuit. In the interview with Crypto Eri, Deaton revealed on the current progress of his efforts:
I will tell you that this time next week everything is going to come into focus about what we are doing here as the XRP community and how it’s really come into place. […] I know it’s a bit vague, but standby. It will be worth it.
For his part, Hogan stated that Deaton’s efforts are of great importance, also for the Ripple vs. SEC case. Judge Torres needs to query a list of related cases, and needs to see the massive negative impact on individual XRP holders, which will reinforce Ripple’s arguments. Regarding Judge Torres, he said:
She needs to understand all the effect all this stuff is having on individual holders of XRP. […] So what John is doing is getting all the individuals together in his lawsuit. Now, in Federal Court you have to always file what’s called a notice of related cases. So the judge needs to know what cases are currently out there related to the case. So the judge gone notice that Johns lawsuit is out there and is going to see all the effects that the SEC vs. Ripple lawsuit is having on individual holders of XRP.
Will there be regulatory clarity for Ripple?
The two attorneys also discussed whether the SEC litigation will provide final regulatory clarity. In doing so, Deaton and Hogan agreed that the case will not provide that hope for the XRP community. Hogan pointed to the most recent example, Kik Interactive’s case against the SEC, noting that the company received three conditions: a ban from violating the law again, a fine, and a condition to sell the KIN token only to accredited investors.
According to Hogan, this could be the “worst case” for Ripple. So the focus of the court battle could be on Ripple’s escrow account. However, there could still be uncertainty about XRP’s classification as a security or non-security in the U.S. after the ruling. Hogan stated:
This case is probably going to come down, in my opinion, to summary judgement which is making the judge the decision, and this is what happened in the Kik Interactive case. […] I don’t think that the security status of XRP is going to make it to trial, I think it’s a summary judgement. […] I think we have a judge who is able to make that decision.
Deaton added that the classification of XRP is ultimately the job of the U.S. Congress. There will be no decision from the court, as there was in the U.K., where the Financial Conduct Authority (FCA) declared three types of tokens and classified XRP as a hybrid between a utility and an exchange token:
What people want in the XRP community, they’re not going to get it from the court. Only congress can do that.
Hogan, in turn, noted that the judgment will give “clarity” but “not a designation that it is a non-security token.”
Cause if you have a judgement or a settlement in your favor, the case is over. The SEC can’t sue you again and try again. So you’re going to get effectively some clarity as far as Ripple is concerned as far as XRP is concerned – even though you’re not going to get a piece of paper from the judge saying that XRP is not a security from now till the end of time.
Court Orders SEC to Answer Ripple’s Interrogatories
Ripple, however, has failed to bury the SEC in paperwork, with the judge granting the agency’s motion for a protection order against “unduly burdensome” requests
Magistrate Judge Sarah Netburn has ordered the U.S. Securities and Exchange Commission to answer some of Ripple’s hotly-contested interrogatories, which are meant to determine whether or not the plaintiff’s contentions can be supported by facts.
The agency will have to specify why the company’s XRP sales are investment contracts:
The SEC’s legal theory is not an excuse to avoid responding to Defendants’ factual inquiry. Nor is it a basis to answer a different question than posed.
In addition, the SEC will have to state whether it believes that Ripple’s efforts were key to boosting the price of XRP.
However, Ripple’s interrogatory about whether or not the XRP Ledger was fully functional prior to the start of the securities offering has been denied for being too vague:
The Court agrees that this interrogatory seeks relevant information. But Defendants’ interrogatory is too vague for the reasons identified by the SEC.
Netburn has also granted the SEC’s motion for a protective order, which allows the regulator not to respond to all of Ripple’s “unreasonably burdensome” interrogatories.
The agency claimed that covering all the 29,947 requests would take 104 days without “breaks or sleep.”
Earlier this week, the court also granted the SEC’s motion to extend the expert discovery deadline to Jan. 14, 2022, despite Ripple’s protestations.
Ripple CEO Says the SEC Helped Ethereum to Surpass XRP as No.2 Crypto
- Ripple CEO aired his opinion on the crypto market and regulations.
- Brad Garlinghouse said the US SEC granted Ethereum regulatory green light.
At the DC Fintech Week virtual conference on October 21, Ripple CEO Brad Garlinghounse aired his thoughts on the state of the crypto market and regulations. Besides, he holds a grudge over the financial regulator’s approach to Ethereum.
In addition, Garlinghouse declared that the US Security and Exchange Commission (SEC) granted Ethereum regulatory green light that enabled it to surpass his firm’s XRP token.
Likewise, the Ripple boss feels that his firm has been played out. But, at the same time, Ethereum’s subsequent success is at least in part down to more favorable treatment by the US SEC. Also, Garlinghouse stated that it is affecting its market. He said,
“Within the last few years, XRP was the second most valuable digital asset. As it became clear the SEC had given a hall pass to ETH, ETH obviously has exploded, and that clarity has helped.”
To clarify, XRP was the second-largest crypto asset by market cap in late December 2017. But, currently, it has dropped to seventh place while Ethereum has kept the second spot ever since.
Furthermore, the reason why XRP dropped is the US SEC pursuing Ripple over claims that XRP is unregistered security. In fact, in January, Ripple filed a Freedom of Information Act request with the US SEC demanding to know why it didn’t consider ETH security.
As a result, later in July, a district judge allowed the firm to depose a former official who declared in 2018 that ETH was not a security.
Ripple CEO reinstates SEC bias towards ETH, claiming XRP could’ve been No.2
It is not news that the ongoing XRP lawsuit has got the better of Ripple’s XRP token. Ripple CEO, Brad Garlinghouse recently questioned the SEC’s bias towards Ethereum, claiming that XRP would’ve been at the No. 2 position instead of ETH if it weren’t for the commission’s partial crackdown. Garlinghouse spoke at the DC Fintech Week virtual conference yesterday, arguing that the U.S. Securities and Exchange Commission alleged Ripple’s XRP as unregistered security while granting Ethereum a regulatory free pass, which in turn helped ETH shoot through the roof.
“Within the last few years, XRP was the second most valuable digital asset. As it became clear the SEC had given a hall pass to ETH, ETH obviously has kind of exploded and that clarity has helped.”
XRP secured the position of the second-largest crypto asset by market capitalization during the latter half of 2017. However, the token has dropped down to seventh place while Ethereum stands strong as No. 2. Furthermore, Garlinghouse claims that the SEC’s exclusively aggressive anti-crypto stance to allegedly protect the consumers is in fact anti-investors. Referring to the XRP lawsuit, Ripple CEO emphasizes that “nearly 50,000 U.S. people who hold XRP who are trying to sue the SEC for ‘protecting them’”.
XRP Holders left with bearish and frozen funds
Earlier this week, Attorney Deaton Filed a Letter Motion on behalf of the XRP Holders (Movants) that contended SEC’s extension request, with the main argument concerning the XRP holders’ frozen funds because of the consistent postponement of the lawsuit’s final verdict. During the ongoing bull run, XRP remains considerably bear because of the regulatory crackdown on Ripple. However, the court has overlooked the community’s concern and granted the extension explaining that in lieu of pending motions, extra time will only facilitate both parties to complete pending fact discovery and thoroughly prepare for upcoming expert depositions.
“The lack of liquidity within the United States, coupled with the mass de-listings prevents XRP Holders from trading, selling, transferring, or converting their XRP. It is because of this de facto in place seizure of their property that XRP Holders took the extraordinary step to seek intervention as defendants… Any delay in the underlying action marks yet another day XRP Holders do not have access to their funds.”, wrote Deaton.