XRP holder’s motion, as a third-party defendant, to intervene in the SEC’s lawsuit against Ripple Labs has been denied by the U.S. District Judge Analisa Torres, according to a court filing this week.
Judge Denies Ripple Motion Due to Court Rules
The application was denied because the XRP holder’s did not provide the judge with a pre-motion letter – a letter from the attorney to the judge setting out the reasons for the likely application. Under Judge Torres’ court rules, this is required before submitting an application.
Attorney John Deaton, who filed the application on behalf of XRP holder’s, reached out to Twitter to reassure the XRP community:
“#XRPHOLDERS: What Did I say about being knocked down and how we respond? It was denied “without prejudice” with the ability to refile in accordance with Judge Torres’ local rules. This simply means it must be refiled as a letter motion. I’m on it, please don’t get discouraged.”
The document submitted to the US District Court for the Southern District states that Deaton’s request for intervention has been “denied without prejudice to renewal in a motion that complies with Rule III(A) of the Court’s Individual Practices in Civil Cases.”
On March 14, Deaton filed on behalf of the XRP holder’s to intervene in the SEC’s unregistered sale of XRP against Ripple Labs valued at more than $1.38 billion. XRP holder’s try to protect their own interests by joining third party accused. They also said that they plan to file a class-action lawsuit against the “billions” of losses caused by the SEC in court documents.
XRP holders noted in another memorandum that “the SEC did not limit the claims (as they have in other digital token cases) to specific distributions of XRP directly sold from the defendants during a specific time period (usually, this includes the initial offering of the asset).”
The document stated: “By claiming that the XRP sold and/or distributed by Ripple — in the present day — are unregistered securities, the SEC is essentially claiming and/or implying that all XRP, including the XRP in thousands of accounts of XRP Holders, many of whom have never heard of the company Ripple, may also constitute unregistered securities.”
The document also provides a list of examples of “Using XRP without a connection, trust, or knowledge of Ripple” including paying in currency in 500+ shopping malls, collateral for collateral, and video streaming on YouTube of small payments.
Earlier this month, Deaton tweeted to ask the XRP community to share their use cases of XRP: “I need help for our case. If you’re aware of any use case for #XRP that doesn’t involve or depend on @Ripple, please describe that independent utility by replying to this tweet thread.” He received over 500 replies to his tweet.
In a letter to Judge Torres yesterday, anticipating a US Securities and Exchange Commission (SEC) strike, Ripple attempted to support Ripple’s defense in the absence of a proper announcement that the US Securities and Exchange Commission (SEC) would impersonate XRP as Security before.
“Lack of fair notice is a valid, constitutional defense to a government enforcement action. It is rooted in the Due Process Clause’s requirement that ‘laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited,'” wrote Andrew Ceresney, an attorney for Ripple. “This defense prevents a government agency from penalizing someone for violating the agency’s interpretation of the law when, in fact, there was no fair notice to the public of what that interpretation was.”
Given the potential impact on XRP investors and the legal precedent for other cryptocurrencies, this case is being closely watched by the cryptocurrency industry.