Ripple’s long-running struggle against the American regulatory Securities and Exchange Commission (SEC) looks set to rumble on – although it could be set to take a new turn as the presiding judge is set to make a key decision, while XRP holders are itching to enter the legal area.
The case centers around the SEC’s claim that the Ripple-affiliated XRP coin is an unregistered security – and Ripple’s claims to the contrary. The latest bone of contention is a so-called combined brief that the SEC has compiled. This 60-page document would essentially allow the regulator to file excess pages that would let it combine opposition to motions put forward by lawyers representing Ripple’s leadership: the CEO Brad Garlinghouse and the Executive Chairman Chris Larsen.
But in a legal document, Larsen and Garlinghouse’s legal team asked the presiding New York District Court magistrate, Judge Analisa Torres, to turn down the SEC request, claiming that the regulator wants to take “a consolidated position to further conflate the relevant allegations” against the duo.
The legal team claimed that the combined brief would “muddy” the legal waters, and instead wants the regulator to “address the specific arguments raised by each individual defendant,” a process they said would allow the executives to “more squarely address the SEC’s opposition arguments against them on reply, and ultimately enable the court to clearly see the parties’ arguments.”
But it looks as though the battlefield could be on the verge of becoming rather crowded. Last month, an attorney representing a group of XRP holders filed a document petitioning the court to let them in on the action.
The attorney wrote that the Ripple chiefs had made it clear that they “do not represent the interests of XRP holders.” And Larsen and Garlinghouse’s team claimed that although they had “no relationship” to the holders, they nevertheless “have strong and distinct interests in the regulatory status of XRP,” adding:
“This court’s ruling may determine those interests. At minimum, it will affect them.”
But it looks like the Ripple bosses are happy to see XRP holders get in on the action – as long as it is on their own terms.
The execs stated that the holders should be allowed “limited participation,” claiming that the court should “deny” the holders’ “request to intervene as representatives of a putative class of additional defendants.”
The Ripple chiefs justified their stance by explaining that XRP token holders were “focused on the present-day status” of the token, with “little interest in past sales.”
Not content to sit idly by and watch the situation play out, the SEC has also come up with its own response – a word-heavy 32-page document that outlines its own objections to the holders’ petition.
The regulator refuted the claim that as “secondary market XRP investors,” the holders were “somehow ‘unnamed defendants,’” claiming that “this particular action does not charge transactions between individuals in the secondary market as violations of Section 5.”
Section 5 refers to a part of the much-maligned United States Securities Act of 1933, which specifies that “all issuers must register non-exempt securities with the SEC.”
The regulator furthermore claimed that the defendants “do not and cannot demonstrate that they would advance any argument or adduce any relevant evidence” that Larsen and Galinghouse, “through the four law firms capably representing them, cannot.”
And the SEC, which accused the holders of submitting “papers” that “essentially recite [the executives’] litigation position,” concluded:
“[The holders] should not be permitted to broaden the scope of the SEC’s claims by intervening in this action in any capacity.”
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