A Manhattan federal court decided on Monday that a group of Ripple Labs Inc. token holders may express their “valuable viewpoint” in the SEC’s action against the firm for allegedly breaking securities law. This action, which claims that XRP is unregistered security based on its market value, is open to six XRP holders’ views, according to U.S. District Judge Analisa Torres.
How to govern the Cryptos
Cryptocurrency lawyers keep a close eye on the case as authorities debate how to govern the asset class. Some digital token issuers have been prosecuted by the SEC for selling unregistered securities, while other assets such as Bitcoin and Ether have been spared.
In March, there were attempts to intervene in the lawsuit by XRP token holders who claimed to be defendants and wanted to safeguard their rights. However, the XRP holders’ lawyer, John Deaton of the Deaton Law Firm, and an SEC representative were unavailable for comment on Monday.
Ripple’s creators founded XRP in 2012. According to a December SEC lawsuit, the San Francisco-based business and its current and previous CEOs have been undertaking a $1.3 billion unregistered securities sale since the token’s inception, which the SEC alleges is illegal.
XRP as a digital asset
According to Ripple and its management, XRP has been exchanged and utilized in the digital currency market. Cryptocurrency exchanges in the U.S., including Coinbase, delisted or froze trading in XRP after the SEC sued, according to the XRP holders who sought to intervene in the case.
A class-action suit brought by XRP holders was rejected by Torres, who argued it would entail unnecessary delays. The SEC had contended that token holders should not be allowed to testify amicus curiae. Torres ordered that they may only say on legal matters, such as whether the lawsuit should be dismissed. An epic confrontation over privileged documents in the SEC’s epic battle with Ripple Labs Inc over the issuance of more than $1.3 billion worth of XRP digital tokens proved irrelevant.
SEC losing the bid for Ripple legal docs
U.S. Magistrate Judge Sarah Netburn of Manhattan adjudicated on Sunday that Ripple didn’t rescind attorney-client prerogative when it claimed in March that the SEC had not explicitly notified whether XRP was subject to federal securities laws in its complaint against the company for allegedly selling unregistered securities. Because of the order, Ripple will not have to hand up hundreds of confidential documents to the SEC.
All of Ripple’s legal advice on XRP is now at risk, according to a letter brief from the commission to Netburn last month. A document sent by Ripple’s outside counsel regarding whether XRP fits the Supreme Court’s standard for security is already in the hands of the SEC. Before the SEC filed its case against Ripple in December, Ripple provided the SEC with those papers during its years-long examination into XRP sales. To refute Ripple’s fair notice position, the SEC stated in a letter brief sent to Netburn that it would require hundreds of more legal papers for which Ripple was still asserting the privilege to establish its case.
As Ripple’s counsel cautioned in published papers with investors, the firm was fully aware that XRP might be deemed securities. An assertion that the SEC made that XRP was being sold without proper notice placed the business subject to issues regarding its state of mind in doing so, the SEC said.