XRP holders attempt to intervene in SEC's lawsuit against Ripple after incurring massive losses
|- Attorney John Deaton has represented over 6,000 XRP token holders to insert themselves in the U.S. Securities and Exchange Commission's ongoing lawsuit against Ripple Labs.
- The filing requested that any funds received from a possible Ripple settlement be diverted to a collective trust to use by XRP investors who suffered losses of over $15 billion after cryptocurrency's price plunged.
- Ripple's two senior executives have asked subpoenas sent to banks asking for their personal financial information.
Holders of XRP, digital tokens created by Ripple Labs, have asked to intervene in the U.S. Securities and Exchange Commission's (SEC) case against the firm. The argument against the SEC's case was built upon the refutation of any securities violations by the fintech firm.
XRP holders cannot rely on Ripple's efforts as protection
In December 2020, the SEC took legal action against Ripple, Garlinghouse, and Larsen, alleging that the XRP token is classified as a security. Therefore the $1.3 billion in funds were raised through an "unregistered, ongoing digital asset securities offering."
The SEC claimed that the two executives failed to register their personal XRP sales, estimated at $600 million.
Now, a group of XRP holders hired attorney John Deaton to file a motion that allows them to insert themselves as third-party defendants in SEC's ongoing lawsuit against Ripple. Deaton argued that token holders' interests were not adequately represented in the lawsuit against Ripple Labs and its executives — co-founder Chris Larsen and CEO Brad Garlinghouse.
Through the official letter addressed to U.S District Court Judge Analisa Torres, on behalf of XRP holders, Deaton wrote:
Given SEC's own statements that this Court is the exclusive forum to hear claims regarding this matter, and Ripple's position that XRP holders cannot rely on Ripple's efforts as protection of their interests in this case and the nature of Ripple's defense, the XRP Holders' intervention is necessary.
Deaton is allegedly representing over 6,000 XRP holders who are looking to sue the SEC as the cryptocurrency plunged in the days following the commencement of the lawsuit, resulting in $15 billion in losses.
The steep fall of the token price was partly due to the decision of major cryptocurrency exchanges, including Binance.US, eToro, Coinbase, and Bittrex, to delist XRP on account of the lawsuit. Grayscale chose to liquidate XRP holdings and convert them into Bitcoin, Bitcoin Cash, and Litecoin instead.
In January, on behalf of XRP holders, Deaton filed a petition asking the SEC to distinguish between XRP purchases made by individual token holders on secondary exchange markets and the XRP sales carried out by Ripple executives.
The filing further requested that any funds received from a possible Ripple settlement be diverted to a collective trust to use by XRP investors who suffered losses from the SEC's actions.
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