SEC attempts to block XRP holders from presenting evidence in Ripple case
- 18th May 2021
- Posted by: Hakeem
- Category: Crypto
- The Securities & Exchange Commission filed another objection to the motion to intervene by XRP holders.
- The government agency argues that allowing third-party defendants into the case would “sow chaos” into the litigation.
- If the court decides to accept XRP holders into the case as “friends of the court,” the SEC would request an additional four months for the discovery process.
The legal battle between Ripple Labs and the Securities & Exchange Commission (SEC) continues as the lawsuit sees no end in sight despite the blockchain firm filing a motion to dismiss the case over a month ago.
SEC argues against the right of XRP holders to present evidence
In response to XRP holders’ motion to intervene in the $1.3 billion lawsuit, the SEC strikes back at XRP holders once again.
Since the beginning of the enforcement action, the securities regulator argued that the XRP cryptocurrency is a security and that the agency intends to “protect investors.”
Since investors of the token have sought to intervene in the lawsuit as a third-party defendant led by attorney John Deaton, the SEC has blocked XRP holders from joining the case, citing that it would cause delays and “sow chaos.”
Ripple executives Brad Garlinghouse and Chris Larsen have expressed support for the participation of XRP holders in the lawsuit. XRP investors have also declared that the SEC – an authority meant to protect the token holders – does not represent their interests.
In the latest filing for the objection of the motion to intervene, SEC lawyers stated:
Seeking to inject themselves as “third-party defendants” in this action, Movants would act as “friends” of Defendants, not true “friends of the court,” if permitted to participate as amici. And Movants’ arguments are not relevant to (and would improperly expand) the violations charged by the SEC in this action.
The government agency further suggested that permitting the third-party defendants to intervene would open the door to intervention by even more XRP investors who believe Ripple and its executives “offered and sold the cryptocurrency as a security and have brought class actions against Ripple.”
The main arguments that the SEC provided to deny XRP holders from intervening suggest that the token investors have nothing to offer beyond what Ripple has provided the court. The regulator further indicated that the third-party defendants should not involve any additional discovery. The agency said:
Defendants’ request is highly prejudicial to the SEC and reveals the true impetus behind their Response—to attempt to back-door an incomplete and unreliable evidentiary record to the Court.
Given that there is little time left in the discovery process, the SEC argued that it could not engage in discovery to test XRP holders’ assertions. Should the court allow XRP investors to participate as “friends of the court,” the regulator would request extending the discovery deadlines by four months.