- Attorney John E. Deaton has filed the pre-motion letter, initiating a second attempt at intervention in the case between Ripple and the SEC.
- At this point, over 10,000 XRP investors support the motion.
As CNF reported, Judge Analisa Torres of the Southern District of New York on March 15 denied John E. Deaton’s motion to intervene in the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple on behalf of thousands of XRP holders. Torres reasoned that under the court’s local rules, a pre-motion letter must be filed requesting approval of the motion.
Deaton had wanted to refer to an exemption, which Torres did not recognize. A few days after that, Deaton is now launching a new effort. As Deaton writes on a blog post on CryptoLaw, he filed the pre-motion letter yesterday, March 19, to request intervention by XRP holders, while there are now over 10,000 XRP investors supporting the motion.
In the letter, Deaton lays out why XRP holders should be allowed to intervene in the case and represent their interests. Deaton states:
Allowing us to intervene is appropriate because neither party in the case currently represents the holders and users of XRP. A key aspect of Ripple’s defense will be to demonstrate that they have no duty or obligation to XRP holders, and given the SEC’s actions thus far, we can’t expect it to even consider the interests of XRP holders.
In the pre-motion motion brief, Deaton further reasons that it is striking that “didn’t limit the claims to specific distributions of XRP directly sold from the Defendants during a specific time period. Instead, the SEC implied that all XRP are securities”. Thus, the SEC implies that all XRP are unregistered securities, including XRP in the accounts of XRP holders.
With the intervention, Deaton aims to demonstrate “that XRP is a government-recognized currency that is completely independent of Ripple. We will show how XRP is being used in the U.S. and around the world as a currency.” Deaton discusses that XRP was first recognized as a currency by FinCEN, and in subsequent years by Japan, Switzerland, the UK, and the UAE.
For example, six years ago, the Financial Crimes Enforcement Network (“FinCEN”) entered into an agreement with Ripple that XRP would be considered a virtual currency and its use would be registered exclusively with FinCEN, not the SEC. Afterwards, foreign nations started agreeing with the U.S. government’s 2015 currency classification of XRP, and Japan, Switzerland, the U.K. and the UAE have all declared XRP is not a security. Since that 2015 designation as virtual currency, the use cases of XRP have exploded.