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SEC against possible “avalanche” of claims if XRP holders intervene

The SEC is calling for Movants’ proposed intervention to be rejected as its “ultimate goal in intervening” for XRP to become available again for trading on digital asset platforms so that Movants can buy and sell XRP as a speculative investment.

The SEC sent a letter to Judge Analisa Torres in response to the March 19 letter from the XRP community attempting to intervene in the lawsuit.

In the letter to the judge for the Southern District of New York, the regulator first indicated that the “applicants” did not explain what claims they would bring against whom in this lawsuit if an intervention were to take place.

The Treasury also claims, “Congress has prohibited the consolidation or coordination of claims by law without the approval of the SEC, and sovereign immunity freezes Movants’ claims against the SEC.”

The SEC is calling for Movants’ proposed intervention to be rejected as its “ultimate goal in intervening” for XRP to become available again for trading on digital asset platforms so that Movants can buy and sell XRP as a speculative investment.

The letter from the XRP holders noted investor losses due to the delisting and / or discontinuation of XRP on cryptocurrency exchanges, proving that “Defendants offered and sold XRP as a speculative investment, but an inadequate basis to intervene in this case.” SEC stated, adding that the defendants are already making the arguments that Movants are trying to make.

“If the court were to allow Movants to intervene, it would likely all other XRP owners, including a large class of XRP investors who defend the defendant Ripple Labs, Inc. (” Ripple “) for unregistered offers and sales of XRP- Having sued securities, probably do so too, intervene. Intervention would thus create an “avalanche” of claims and “near certainty of undue delay, complexity and confusion,” the SEC concluded.

The defendants (Ripple, Brad Bradley Garlinghouse and Christian A. Larsen) also sent a letter to the judge in response to the XRP owners’ call to intervene.

According to the letter, the interveners rightly found that the SEC’s amended complaint did not explain their case as to whether or not XRP is a security.

“Given this ambiguity and the possible overriding impact of this litigation on non-parties, the defendants agree that the interveners should be allowed to proceed with their motion to clarify this point,” said the letter from Ripple, CEO Brad Garlinghouse and co-founder Christian A. Larsen stated.

FinanceFeeds recently reported on attorney Jeremy Hogan’s comments on a recent court session in which the judge dropped a “bomb”.

“My understanding of XRP is that not only does it have a currency value, it has a utility as well, and this utility is what sets it apart from Bitcoin and Ether,” which might suggest that she doesn’t consider it security.

The judge also questioned the SEC attorney that, according to his theory, “everyone who has sold XRP – including you and I – sells illegal securities”. The SEC attorney said, “No, under Section 4, only Ripple and Ripple affiliates can have illegally sold XRP.”

This statement from the SEC attorney paves the way for US cryptocurrency exchanges to re-list XRP without fear of retaliation.

The lawsuit against Ripple alleges that co-founders supported and facilitated Ripple’s unregistered sales of securities in 2013 and 2015, respectively.

In response, Ripple stated “never offered or sold XRP as an investment” and that “XRP holders do not acquire any right to Ripple’s assets, hold any ownership interests in Ripple, or participate in Ripple’s future profits. “

The SEC’s lawsuit against Ripple could hinder the company in the race for CBDCs. Ripple recently released a whitepaper advocating the private XRP ledger as a bridge for central bank digital currencies.

It’s unclear whether Ripple’s white paper is targeting central banks to put pressure on the ongoing legal battle with the SEC. Either way, central banks may hesitate to partner with Ripple at this particular point in time.

This is even more true if you lose the case and the company is overwhelmed with private legal claims. Too much uncertainty to deal with as competitors grab central banks’ attention, including Corda, Ethereum, Stellar, Hedera, and R3’s eftpos.

However, Ripple has already caught the attention of France and the European Central Bank plans to introduce the digital euro within the next five years. Panetta from the ECB has proposed a threshold of EUR 3,000 for every citizen.

The creator of the XRP ledger can still take care of the legal issues and work with the central banks by setting up a separate company or subsidiary. As open source, the ledger can always be used by anyone interested, but without the privacy settings offered in its recently announced CBDC Private Ledger.

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