The SEC said XRP holders wanted to intervene in the Ripple case to “restore speculative trading.”
In a letter to Federal Judge Analisa Torres on March 26, Jorge Tenreiro, a senior trial lawyer with the U.S. Securities and Exchange Commission, urged the court to prevent XRP owners from interfering with the Ripple case.
Allowing their intervention will result in “confusion” and “unmanageable complexity”. According to the SEC, XRP investor Vladi Zakinov, who filed a class action against Ripple in June 2018, will need a seat at the table with other owners who claim that the company sold the token as an unregistered security:
Moreover, if the Court allows Movants to intervene, all other XRP holders, including a large class of XRP investors who sued Ripple Labs, Inc. There will also be intervention.
Tenreiro claims that John Deaton, who sent a pre-action letter on behalf of 10,000 XRP holders last week, was mainly motivated by potentially selling tokens to other investors:
Movant’s primary motivation seems to be to reinstate speculative trading of XRP on digital asset platforms so that Movant can sell XRP to other investors for profit.
The SEC cites an FXStreet article citing Deaton’s prediction that XRP would potentially double its price if crypto exchanges restart trading.
Deaton claims in his January tweet that there is no disgruntled XRP investor losing money on the token.
Ripple does not object to the intervention
In response to the SEC’s letter, Ripple took a neutral stance on the matter without objecting to the impending action to intervene:
However, the blockchain company says the securities watchdog needs to clarify whether its team will affect the secondary XRP market:
The SEC now has a chance to confirm, in the face of the supposed Letter of Interventionists, that its status is not intended to affect the secondary retail market for XRP in the United States. Despite some broad wording in the amended complaint, the SEC at times suggested that the liability theory was indeed more limited, such that secondary market sales and other transactions in XRP would not be subject to federal securities laws.