XRP holders – or at least six of them – will get their day in court in the long-running saga that has pitted senior Ripple executives against the regulatory US Securities and Exchange Commission (SEC). But the regulator is refusing to let up in its crackdown on crypto-related firms, and has served up Circle Financial, the issuer of the second-most popular stablecoin, USD coin (USDC), with a subpoena.
In the Ripple-SEC case, which revolves around the assertion that executives knowingly sold an unregistered security, XRP holders have been attempting to insert themselves into the legal struggle for some time. The regulator would rather duke it out with the Ripple executives alone. However, in an official ruling, Manhattan District Court Judge Analisa Torres wrote that the court should be allowed to hear the “meaningful perspective” of XRP holders.
Torres’ assertion came despite SEC claims in an official attempt to halt the intervention that the XRP token holders “cannot offer any unique perspective or information that is not already available to the court, either in the public record or through the presentation of the [executives’] counsel.”
The lawyer representing a group of XRP holders was in a celebratory mood on Twitter.
A few days ago @BlackberryXRP tweeted out:
“We were all on TV today” regarding my appearance on the countdown with @LizClaman and @CGasparino.
We were all granted amicus status today! https://t.co/j2mBXooB4p— John E Deaton (@JohnEDeaton1) October 4, 2021
Although Torres stated that the holders could not “intervene as a class,” as this would cause delay, she added [citing legal precedent] that “they will provide the court with a meaningful perspective, and will help ensure [the] ‘complete and plenary presentation of difficult issues so that the court may reach a proper decision.’”
She ruled that the holders “shall be allowed to assist the court by briefing legal issues relevant to the case as approved in advance by the court.”
However, although the judge wrote that amicus status would allow the XRP holders “to assist with ‘significant legal issues,’” she expressed the view that the court would be “acknowledging the [group]’s ‘highly partisan position.’”
At 07:48 UTC, XRP, ranked 7th by market capitalization, trades at USD 1.05 and is up by almost 2% in a day and 14% in a week.
Meanwhile, the SEC also appears undaunted in its pursuit of another major American crypto player, namely Circle.
In a filing to the SEC, Circle revealed that it had actually received an “investigative subpoena” from the regulator’s Enforcement Division back in July this year, asking it to provide “documents and information.”
The company wrote:
“In July 2021, we received an investigative subpoena from the SEC Enforcement Division requesting documents and information regarding certain of our holdings, customer programs and operations. We are cooperating fully with their investigation.”
Some media outlets have pointed out that Circle made a similar admission in a document back in August, although this section appears to have been overlooked by most at the 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.