A federal judge in the United States has granted a motion by XRP holders to intervene in a lawsuit against Ripple Labs by the U.S. Securities and Exchange Commission (SEC). The judge gave the token holders until April 19 to submit their motion to intervene in the high-profile case.
“The Court has reviewed the parties’ and proposed intervenors’ letters […]. Accordingly, the proposed intervenors’ request for leave to file a motion to intervene is GRANTED,” Judge Analisa Torres of the Southern District of New York in a letter filed on March 29.
By April 19, the XRP holders shall file their motion to intervene. Plaintiffs have two weeks—or until May 3—to file their papers opposing the move. If the investors are to file a response to the plaintiffs’ opposition papers, they must do so by May 17.
Judge Torres had initially rejected the XRP holders’ motion to intervene, as CoinGeek reported.
XRP holders filed their motion on March 19, seeking to intervene as third-party defendants in the SEC lawsuit against Ripple Labs and its executives. The regulator has sued the company for selling XRP, which it considers a security. The lawsuit was filed in December 2020 by the regulator which was then led by Jay Clayton. Clayton has since left his post at the SEC, but the commission’s new leadership has continued to pursue Ripple Labs.
The motion to intervene was filed by Deaton Law Firm on behalf of 6,000 XRP holders. The law firm argued that with the SEC claiming all XRP tokens are securities, it was implying that XRP holders owned an unregistered security. This made the intervention necessary as it was directly impacting them.
Deaton further pointed to the massive losses these investors had incurred since the SEC filed the lawsuit. Many exchanges in the U.S. had moved to delist the asset, leading to a free fall in its price which shed over three-quarters of its value. Deaton estimated the losses to be over $15 billion at the time.
The legal team representing Chris Larsen and Brad Garlinghouse—Ripple’s chairman and CEO respectively—filed a motion a week later supporting the XRP holders’ motion to intervene. It claimed that SEC was unclear on whether it was alleging XRP was a security or if it was merely pursuing Ripple Labs’ sales of XRP “based on the circumstances of those sales.”
“Given this ambiguity, and the potential precedential impact of this litigation on non-parties, Defendants agree that Intervenors should be permitted to proceed with their motion to clarify this point,” Ripple wrote.
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