The ongoing legal battle between blockchain firm Ripple Labs and the United States Securities and Exchange Commission has taken yet another turn.
According to the latest update in the case, U.S District Judge Analisa Torres has given XRP token holders the status of amici curiae or “friend of the court.” The judge ruled that individuals holding the company’s XRP token cannot act as defendants in the lawsuit. However, the aforementioned grant would allow them to assist the court in briefing legal issues relevant to the SEC v. Ripple case.
The news came on the back of Judge Torres denying a “motion to intervene as defendants” filed by John Deaton, an attorney representing a class of XRP holders. According to the judge, holders joining the suit would “compel the SEC to take enforcement action against them.” This would “undesirably delay the case” even further, she added.
Instead, Judge Torres ruled that they can instead act as friends of the court. This means they would be allowed by the court to advise or provide information, but not participate in the litigation process. The ruling further read,
“The court concludes that amici status strikes a proper balance between permitting movants to assert their interest in this case and allowing the parties to remain in control of the litigation.”
Needless to say, reactions in the XRP community were by and large positive. James K. Filan, for instance, highlighted the merits of this decision by tweeting,
#XRPCommunity #SECGov v. #Ripple #XRP BREAKING: 1/3 Court gives @JohnEDeaton1 power to brief questions of law on behalf of Individual Movants. This is a HUGE win for the #XRPCommunity because the interests of the Individual Movants and the #XRPCommunity are aligned. https://t.co/9BKbLC2z7X— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) October 4, 2021
XRP holders had filed the motion to intervene earlier in March. At the time, they had claimed that they want to protect their interests as they could lose billions if the agency wins the case. Deaton’s daughter, who is also an XRP holder, had also pointed out that the token lost $15 billion in revenue after being delisted from top cryptocurrency exchanges.
In a 4 October interview, Ethereum co-founder Joseph Lubin sided with the regulatory body and its differential treatment of XRP, however. He was quoted as saying,
“[The SEC] may have legit arguments in the cases that are being discussed right now. I don’t believe the SEC is trying to squelch innovation.”
This was a response to John Deaton’s blog post. In the same, he had complained about the unfair treatment Ripple has been getting in comparison to Ethereum. According to the lawyer, Ethereum got what he called a “regulatory free pass” for its own ICO.
Taking to Twitter, he hit back at the exec once again, stating,
“Are you serious? Hester Peirce aka Crypto Mom is an SEC commissioner and has been openly critical of the SEC’s lack of clarity and its impact on innovation BUT @ethereumJoseph believes the SEC is doing a good job? Joe needs a new PR advisor.”
SEC v. Ripple: More than 50,000 XRP holders and ‘friends’ want to
The SEC v. Ripple Labs lawsuit is soon to enter mid-fall. Alas, the theme of the season seems to be extensions and delays as both parties are divided over the same.
Just recently, the American regulator requested that the expert rebuttal report deadline be moved to 12 November and expert discovery be pushed to 2022.
However, another group wants to be heard. John E. Deaton, Counsel for Amici Curiae – or “friends of the court” – has now filed a letter asking U.S. District Judge Analisa Torres to consider the views of XRP holders.
A ‘friend’s’ perspective
Though Deaton is worried about “annoying” the court, his filing referenced the SEC’s call for a two-month extension. He requested,
“…please accept this letter to serve as both the application for XRP Holders to offer their perspective, as well as an offer of proof of said perspective.”
What’s more, Deaton confirmed that he will not repeat any points made by the defendants in this case. Even so, he stated,
“In opposing the SEC’s request for this delay, Ripple’s argument focuses on how the “freezing” of XRP markets within the United States impacts Ripple. The negative impact on XRP Holders is even more profound.”
So, how many investors reportedly really want to join the crypto-lawyer? Well, Deaton claimed that as of 19 October, over 50,000 XRP holders had reached out to him in order to be part of the “putative class.”
As previously reported, the San Francisco-based blockchain company consented to push the rebuttal report deadline to 12 November. However, it is against the expert discovery deadline being moved to 14 January. Ripple opposed the extension, claiming that “further delay would prejudice Ripple and the market for XRP.”
For his part, Deaton also noted that many major exchanges had de-listed XRP due to its legal troubles in the USA. Additionally, he also pointed out that XRP in retirement brokerage accounts had been “frozen.”
In essence, Deaton claimed,
“Any delay in the underlying action marks yet another day XRP Holders do not have access to their funds.”
Checking in on XRP
One source of contention in recent days has been how the SEC’s extension request would affect XRP’s performance. The SEC claimed that XRP sales are “robust” and that the asset had seen price rises even during the lawsuit. Ripple, however, claimed that despite the rise in price, XRP has been “lagging behind the market.”
At press time, XRP was trading at $1.10, well below the levels it hit a few months ago.
XRP Lawsuit: Ripple objects further extensions in lieu of frozen XRP markets
The latest update in the XRP lawsuit saw Ripple file an opposition to the SEC’s letter seeking a two-month extension of the Court-ordered expert discovery deadline, dragging the case further into the new year. Ripple noted that while it agreed to extend the deadline for rebuttal expert reports to November 12, expert discovery should not be extended beyond December 10. Ripple asserted that extending expert discovery to January 2022 will “unduly prejudice” Ripple and continue to “freeze” XRP markets in the United States.
XRP remains bearish during the ongoing bull run
As other tokens are enjoying the ongoing bull run, XRP continues to stay bearish because of the lawsuit. Ripple suggested that the court should consider whether allowing further modifications in the schedule at this stage of the litigation will prejudice defendants. The defendants argue that with every additional day this suit is pending is another day where the XRP markets remain frozen, and these are the markets that Ripple depends on for its product offerings, therefore it is “severely prejudicial” to Ripple’s business.
“The SEC’s claim that its proposed extension “would not prejudice Defendants in any material way” ignores the obvious. The pendency of this lawsuit has significantly hurt the markets for XRP, especially in the United States. Ripple’s cross-border payment product relies on liquid XRP markets. The SEC well knows that within days of it filing its suit, almost 20 exchanges de-listed or suspended XRP trading in the United States,1 and more have since followed suit, critically damaging the market for XRP.”
SEC’s December 17 compromise exposed
Ripple also highlighted the SEC’s hypocritical move in approaching the defendants for a compromise that it eventually agreed to but filed a completely different motion. The defense noted that the plaintiff’s initial proposal that was made just three days before it filed this motion, was to extend the expert discovery deadline to December 22. The day before the SEC filed its motion, Ripple offered the December 10 deadline, to which the SEC disagreed and proposed December 17. However, on the very day, the commission filed a motion appealing for an extension of expert discovery to January 14, 2022, it also represented to Ripple that discovery could be completed nearly one month earlier, by December 17.
XRP Lawsuit: Ripple says discovery deadline extension would be ‘severely prejudicial’
The lawsuit filed by the United States Securities and Exchange Commission (SEC), against blockchain company, Ripple Labs for selling unregistered securities is inching closer to being a year old while showing no signs of settling soon.
Even as the SEC is trying to delay deadlines fixed earlier by the court, Ripple is putting in similar efforts to wrap up the case as quickly as possible. In a motion opposing the SEC’s previous request for a deadline extension on fact discovery to 12 January, the defendant asked the court on 19 October that the SEC’s proposal be denied on several grounds.
Ripple agreed to extend the deadline for rebuttal, expert reports to 12 November even as it “is prepared to meet the original schedule.” Further, the firm proposed that the deadline for expert depositions be extended no further than 10 December, as this would provide sufficient time between the two procedures.
Ripple has claimed that before the SEC filed its motion for an extension on 15 October, both parties had sought to reach an agreement without court intervention. Further, the SEC had originally proposed extending the close of expert discovery to 22 December, which Ripple had agreed to despite being able to meet the original deadline set by the court.
With the SEC changing its tune, Ripple sought the court’s help in preventing the lawsuit from being prolonged further. The court itself had frowned upon permitting further delay after the previous deadline extension for discovery.
The main reason behind Ripple’s opposition is the fact that “further delay would prejudice Ripple and the market for XRP.” Highlighting the losses garnered by the company since the beginning of the lawsuit, the letter stated,
“The pendency of this lawsuit has significantly hurt the markets for XRP, especially in the United States. Ripple’s cross-border payment product relies on liquid XRP markets.”
“Within days of it filing its suit, almost 20 exchanges de-listed or suspended XRP trading in the United States, and more have since followed suit, critically damaging the market for XRP. This is severely prejudicial to Ripple’s business.”
However, the regulatory authority insisted that Ripple has “continued robust sales of XRP” along with experiencing price rises during the pendency of the litigation. The defendant stated that its overseas business and markets showed resilience during this time, which in no way meant that Ripple and XRP’s markets were not “severely damaged by the pendency of this lawsuit.” It further stated,
“Indeed, although the price of XRP has risen in the last year along with the broader digital currency market, its performance has lagged behind the market, including currencies like bitcoin and ether.”