SEC Says XRP Holders Are Compelling It to Bring Enforcement Action Against Them
The U.S. Securities and Exchange Commission is seeking to prevent XRP holders from injecting themselves into the Ripple lawsuit, explaining that it hasn’t charged any individual secondary market investors.
In its opposition to the motion to intervene, it states that the movants are compelling it to bring an enforcement action against them, which is a decision committed to the agency’s discretion:
Movants are constitutionally and statutorily barred from intervening as third-party defendants in the SEC’s law enforcement action.
The regulator adds that such private claims are barred by sovereign immunity, an argument that was originally made in its motion to dismiss the investors’ failed petition for a writ of mandamus.
Furthermore, the SEC asserts that the movants cannot obtain any relief from exchanges that have suspended XRP trading or delisted the token since they are not a party to the lawsuit.
The SEC claims that the movements haven’t actually brought any new merits arguments to the table. Instead, they copied the ones that had been already made by Ripple.
The investors offer a list of rehashed statements that focus on XRP’s regulatory status, its alleged uses, and other issues that are being “vigorously” litigated by the existing parties.
Furthermore, the SEC states that XRP holders are attempting to start a “crusade” against the government agency to expose its alleged corruption. It also implies that attorney John Deaton, who’s spearheading the effort, is trying to boost his Twitter clout:
Between February 28 and March 14, 2021, Deaton—noting that he was increasingly “popular” on Twitter for his efforts—pivoted from a strategy of seeking mandamus to collecting participants in a potential class action against the SEC.
Ripple wants XRP holders to intervene
The SEC claims that XRP holders’ interests are already “adequately represented” by Ripple.
However, in its own response, the distributed ledger technology provider writes that the movants should be allowed to intervene in the case since they have “strong and distinct” interests in XRP’s regulatory status.