A federal judge has accepted token holders' claim that their interests are not being adequately represented in the SEC's ongoing lawsuit against Ripple Labs.
XRP tokenholders who have sought the right to intervene in the ongoing case against Ripple Labs by the United States Securities and Exchange Commission have been given the green light by the district judge of the court of the Southern District of New York.
According to a letter filed by District Judge Anna Torres on March 29, the proposed intervenors have until April 19 to file their motion to intervene, with further deadlines up until mid May being set for the filing of opposition and responses by both the SEC and the defendants themselves.
Their argument was backed up by a letter filed with the court on March 26 by lawyers representing Ripple Labs executives Brad Garlinghouse and Christian Larsen, both defendants in the SEC's case.
They wrote to Judge Torres that, in their view, the six individuals seeking to intervene "in order to protect the interests of a putative class of 'thousands' of 'holders' of XRP" have concerns that are "well-founded" regarding the "lack of clarity" in the SEC's case.
The SEC, according to the defendants, has “conclusory allegations suggesting XRP is always a security,” implying that “every offer, sale, or transaction involving XRP is subject to the panoply of regulatory requirements mandated by the federal securities laws.”
This was echoed in a letter filed by Deaton Law Firm on March 19 on behalf of the tokenholders, where lawyers wrote that the SEC’s claim that all XRP are securities, “from 2013 to the present,” appears to imply that “all XRP constitute unregistered securities, including the XRP in the accounts of the XRP holders.”
XRP holders have, therefore, “suffered great prejudice based on these ‘present day’ allegations,” Deaton Law Firm wrote. Their request to intervene rests on the fact that they seek to ensure that “adjudication of this case considered the full array of vested property interests at stake, and to make sure those interests and related rights are fully and vigorously defended.”
As previously noted by both Deaton Law Firm and the Ripple Labs defendants, the SEC’s action had resulted in the value of circulating XRP declining by over $15 billion.
In its own letter to Judge Torres, filed on March 26, the SEC had argued that those filing the motion to intervene itself lacked clarity and did not “explain what claims they would assert against whom in this action if the Court were to permit them to intervene.”
In addition to citing the fact that Congress has “barred by statute the consolidation or coordination of claims without the SEC’s consent,” the agency argued that the holders appeal rested on an “improper basis.”