New SEC objection letter demands refusal of 3,252 XRP token holder affidavits and the prohibition of Ripple attorney John E. Deaton from participating in the case as former Ripple co-founder finalizes sales of XRP token holdings.
The ongoing legal conflict between the US Securities and Investment Commission and Ripple, the San Francisco-based tech firm behind the Ripple blockchain and XRP token, has seen further developments this week with the SEC attempting to prevent XRP token holders from participating in Ripple’s legal defense.
An official objection submitted by the SEC on Tuesday opposed the recognition of “amici curiae” status to 1,746 XRP holders, which would allow them to operate as individuals or organizations that, while not party to a legal case, are able to provide insight or expertise — in this case, in the assistance of the Ripple legal defense.
In addition to the 1,746 XRP holders defined in the objection, the SEC specifically requested the prohibition of Ripple attorney John E. Deaton from participating in further proceedings.
Deaton, working with Ripple to define the Ripple XRP token as a virtual currency rather than an investment contract such as a stock, currently holds 3,252 individual affidavits signed by XRP token holders attesting to losses incurred due to the SEC’s lawsuit.
SEC Letter Highlights Alleged Threats Against Former SEC Chairman
Claims made by XRP token holders affidavits state that purchases of XRP tokens were made for utility purposes, as opposed to as an investment purchase catalyze by statements published by Ripple or its representatives.
Within the heavily redacted letter of objection submitted by the SEC to Judge Analisa Torres, the SEC highlights the fact that the court has “already rejected Movant’s attempt to “offer evidence or present witnesses,” stating that permitting Deaton to offer the affidavits in contravention of prior Court order would be prejudicial and delay the resolution of the case in addition to circumventing Court-imposed discovery restrictions and limitations.
The SEC also cites alleged threats issued by Deaton against former SEC chairman Jay Clayton as justification for the dismissal of Ripple’s primary defense attorney’s amicus status. The commission’s objection letter specifically references a YouTube video published in 2021 in which Deaton states that he may “walk over and slap” the SEC chairman.
The XRP token holders participating in the submission of affidavits and Deaton are expected to publish a public reply to the SEC objection letter by July 25.
Ripple Co-Founder Completes Sale of XRP Token Holdings
Other movements within the XRP legal conflict ecosystem include the sell-off of nearly 9 billion XRP tokens by Ripple co-founder Jed McCaleb.
Highlighted by cryptocurrency and blockchain researcher Leonidas Hadjiloizou and published via Twitter, transaction data associated with McCaleb’s XRP holdings indicate that the former Ripple executive has finalized the sale of nearly 9 billion XRP over a ten-year period, generating $3.09 billion and 708 Bitcoin (BTC). Data published by Hadjiloizou purports that McCalebs’ Bitcoin holdings are currently valued at over $15 million as of the time of publishing.
McCaleb operated as Ripple’s CTO until 2013, at which point the co-founder broke away from Ripple to launch Stellar (XLM). Legal agreements between McCaleb and Ripple limited the disposal of McCaleb’s XLM holdings, allowing McCaleb to only collectively sell a specific percentage of the daily trading volume of the XRP token.
Ripple published an official confirmation of McCaleb’s final sale on July 18. Further developments within the ongoing Ripple SEC lawsuit will determine the legal status of XRP, with far-reaching implications across the cryptocurrency ecosystem should Judge Analisa Torres rule in favor of SEC demands to classify XPR as a security.