The United States Securities and Exchange Commission (SEC) is attempting to block Ripple (XRP) holders from aiding in Ripple’s defense, and prohibit attorney John E. Deaton from any further participation in proceedings.
In its official objection submitted on Tuesday, the regulator opposed the decision to recognize 1,746 XRP holders as “amici curiae” along with attorney John E. Deaton.
Amici (plural: amici curiae) means “friend of the court” — an individual or organization not a party to a legal case but is permitted to assist a court by providing information, expertise or insights. In this case, in support of Ripple’s defense.
Deaton has 3,252 affidavits signed by the token holders essentially stating that they are victims of the SEC’s lawsuit against Ripple as a result of lost profits.
In the affidavits, holders claim that they didn’t assume legal responsibility for purchasing XRP tokens. They also claim that they purchased the tokens for investment purposes and not for their personal use.
The commission argued that XRP holders were trying to operate beyond the legal boundaries in their objection. The SEC wrote the following:
“Movants do not propose briefing on legal issues. Instead, they wish to present arguments based on 3,252 affidavits ‘attesting’ to certain facts.”
Deaton’s threats to Jay Clayton, former chairman of the SEC, were cited by the commission as a reason for dismissing him as amicus. The SEC included a redacted letter dated June 7 to Judge Torres that cites a YouTube video from 2021 in which Deaton stated he “might have to walk over and slap the [profanity] out of former SEC Chair Jay Clayton.”
The XRP holders and Deaton as amici are required to submit a public reply to the SEC’s objection by July 25.
Ripple is a cryptocurrency company that issues the XRP coin. In a case that began in 2020, the SEC alleges that Ripple and Christian Larsen, its executives, sold XRP to unregistered securities.
Deaton queries SEC’s treatment of McCaleb
Deaton claimed that the SEC was inconsistent in its application of law against Ripple and Garlinghouse. The lawyer said that if the SEC really believed XRP to be a security, it would have issued an injunction against Ripple as well as a cease-and-desist order against Jed McCaleb and the two executives.
Jed McCaleb is the cofounder of Ripple and has sold nine million XRP since he quit the company in 2014.
SEC claims #XRP The SEC claims that the security is itself a security. Anyone who sells it is violating Section 5 Securities Act. The SEC claims @Ripple @bgarlinghouse & @chrislarsensf “enriched” themselves at the expense of investors and it is seeking $1.3B in disgorgement from these defendants. https://t.co/9nJ1iNroth
— John E Deaton (207K Followers Beware Imposters) (@JohnEDeaton1) July 18, 2022
The outcome of the case could impact whether XRP is a security. If the judge decides in favor of SEC, it could become the precedent the commission needs for legal action against other crypto-projects that have sold tokens similar to Ripple.