US District Judge Analisa Torres ruled on Monday that a group of individuals who own XRP can offer their “meaningful perspective” in the US Securities and Exchange Commission’s (SEC) case against Ripple, despite denying their motion to intervene as defendants.
The US regulator filed a lawsuit against the blockchain company in December last year, alleging a securities law violation.
XRP holders as amici curiae
“We were all granted amicus status today,” John Deaton of the Deaton Law Firm, who represents the XRP holders, wrote on Twitter.
We were all granted amicus status today! https://t.co/j2mBXooB4p
— John E Deaton (@JohnEDeaton1) October 4, 2021
While denying the XRP holders’ bid to intervene as a class in the case, Judge Torres argued that the regulator would be required to take enforcement actions against each individual XRP holder if they were permitted to participate as defendants.
The regulator argued against allowing the token holders to act as amici, claiming that they are not neutral parties, but Judge Torres disagreed and ruled that “amici status strikes a proper balance between permitting Movants to assert their interest in this case and allowing the parties to remain in control of the litigation.”
Despite rejecting XRP holders’ bid to join the case as defendants, Judge Torres ruled that they can offer opinions on certain legal questions in the lawsuit.
“Movants may view XRP differently from Defendants and thus may stress different arguments, and so, even if intervention is unavailable, they will provide the Court with a meaningful perspective,” added Torres, clarifying that “in order to maintain the balance between parties and amici, the Court will not permit Movants, as amici, to offer evidence or present witnesses.”
The Court’s decision was celebrated as a breakthrough in the case by those on Ripple’s side of the battle.
XRP holders have always said that the SEC’s lawsuit is a direct attack on them. Now it’s official. The Court’s ruling permits John Deaton to share his “meaningful perspective” to help the Court “reach a proper decision.” Yet another important (and positive) development. https://t.co/JXeyhlKABT
— Stuart Alderoty (@s_alderoty) October 4, 2021
“Yet another important (and positive) development,” commented Ripple’s General Counsel, Stuart Alderoty.
De facto defendants
Arguing that they were de facto defendants in the case, wanting to protect their interests, XRP holders sought to intervene in the case in March 2021.
“Claiming to protect investors, the SEC is seeking $1.3 billion in alleged ill-gotten gains from the named defendants, but by alleging that today’s XRP may constitute unregistered securities, the SEC caused over $15 billion in losses for XRP Holders. Hence, the relevant question is who, exactly, is the SEC protecting by going after XRP,” read the memorandum in support of XRP holders’ motion to intervene in the case.
As the legal saga keeps unraveling, the SEC continues with its efforts to bring the US crypto market under a “public policy framework.”
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