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Hello this is attorney Jeremy Hogan and welcome to Legal Briefs – crypto edition. Attorney John Deaton has just filed a Motion to Intervene in the SEC v. Ripple lawsuit and this might be the most important pleading in the case to date and I am going to tell you why that is and how it works and finally how you, yes YOU are needed. Because if Ripple is Captain America, you are spiderman and Antman and Shuri – except you obviously haven’t just been resurrected.
I get to be Black Panther – obviously the best Marvel character.
And speaking of teamwork, I just got home from the office and today my amazing receptionist said she would go around and get some testimonials from my staff – my team – about how it is to work for/with me. And I’m excited to watch this – she put together a compilation so let’s watch. I love praise even if people HAVE to say nice things about me. Let’s watch.
Wait – what?
Atorney John Deaton just filed an Intervention in the SEC v. Ripple lawsuit and this very well might the most important pleading in the case and we are going talk about why that is and also how, if you hold XRP, how you can help.
First, the legal disclaimer: Do not take my YouTube ramblings as legal advice – if you need a good legal opinion, ask this guy who is the only superhero who is a lawyer during the daytime.
And bonus points if you can name the actor who “played” him in the movie.
So as you may recall, certain holders of XRP back in early January filed a Petition for a Writ of Mandamus in Federal Court but NOT in the Ripple lawsuit – it was a separate lawsuit filed in Rhode Island I believe. The Petition essentially asked the Court to force the SEC to state that XRP is not a security. As I expected, the SEC responded with a Motion to Dismiss the lawsuit and this is what I said a month or two ago about the Petition in question:
And sure enough, that is essentially what the SEC also said in its Motion to Dismiss. So, the SEC wins right? Wrong. This is something you have to understand in litigation – you can lose the battle but win the war. So, the Petition for a writ of mandamus might be dismissed. But look what two things it forced the SEC to argue.
For the first point, I will paraphrase from the Forbes article on the issue because I like the way she phrases it:
“For those watching the Ripple case in New York, it carried an astonishing argument: the SEC asked to dismiss Deaton’s petition because no determination has yet been made on whether XRP is a security. …One wonders which part of the 1933 Securities Act the SEC will eventually use to argue that Ripple is obliged to have psychic powers to operate lawfully in the United States.”
Journalists are awesome sometimes.
I understand why the SEC felt like it had to argue that there had been no official designation of XRP yet from a technical legal standpoint – but sometimes you drop a line of argument because it hurts the bigger argument and I think the SEC dropped the ball on that one.
And the second thing that came from the Petition by Attorney Deaton was THIS from the SEC:
Look at pg 12 of the SEC response where it is arguing what I basically said in my prior video that courts frown on having two parallel actions going at the same time and it says THIS:
“Here, an avenue for judicial review of the Commission’s complaint against Ripple clearly exists. The Southern District of New York will decide whether the complaint warrants any relief. Thus, the Commission’s enforcement proceeding in the Southern District of New York, brought under the Securities Act, supplies the exclusive method for testing the validity of the Commission’s complaint against Ripple.”
So, a good litigator takes these SEC lemons and makes some lemonade. At some point in the last month Attorney Deaton made the decision to intervene in the SEC v. Ripple lawsuit and he does a little verbal jiu-jitsu on SEC, using their own words against them in his initial letter to the Ripple Judge:
Look at the last paragraph on page 2:
“On March 5, 2021, the SEC filed a Motion to Dismiss XRP Holders’ petition for Writ of Mandamus. In its Motion to Dismiss, the SEC made clear that this Honorable Court serves as the exclusive forum to hear all claims related to its Complaint against Ripple and the Digital Asset XRP.”
Boom – good lawyering – be like water.
So, I knew that something like this was coming and honestly I was curious about the Writ of Mandamus filed in Rhode Island and what the purpose was. But IF it was filed just to get a motion to dismiss and for that paragraph about how the SEC v. Ripple lawsuit should adjudicate ALL the XRP securities issues – it was well played and served its purpose even if it is ultimately dismissed..
Because A Motion to Intervene in a lawsuit is not automatic- you have to be allowed by the Judge and here’s the Rule on intervention:
XRP holders have 2 arguments: first, that they can get involved in the lawsuit as a matter of right and that would be under subparagraph 2 if The intervenor “claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest.”
Intervention as a matter of right means that the Judge has to allow you in and I think XRP holder fall under this umbrella. XRP holders have an interest in XRP – that’s the first part, and for the second part – if XRP sales are deemed sales of a security, then that impairs XRP holders use of it – even if only because the exchanges won’t list it for US citizens.
So, I think the Judge has to allow the intervention which would make the XRP holders in Deaton’s lawsuit a party to the case. But the SEC will fight this of course and the basis will be that the Court’s decision will not impair XRP holders in any direct way.
But THE SEC has GOT to fight allowing XRP holders into the lawsuit because it hurts them in three SUPER important ways:
First, remember what me and my Dad told you a couple weeks ago about Judges:
I love referring to myself as an authority.
SO, I was wondering HOW the individual XRP holder’s stories would get in front of the Judge – it would be awkward at best for Ripple to submit affidavits from XRP owners..it doesn’t really work well. So, of course to have individual holders in the lawsuit itself is PERFECT and clears up one concern I had about the litigation. Attorney Deaton can submit a Motion for Summary Judgment on behalf of all the XRP owners and attached to the motion he can include numerous and compelling affidavits from now PARTIES to the lawsuit about their stories and can emphasize that they had no expectation of profit based on what Ripple was doing (saying there was no investment contract) and ALSO and I think more importantly they can tell the Judge how this lawsuit has effected their XRP holdings, the money that was lost, the inability to trade, and really put a human face on what the SEC is doing.
Look at page 18 – “Examples of Today’s XRP Being Utilized With No Connection, Reliance or Knowledge of Ripple” I saw Attorney Deaton request this information from people on Twitter and this is GREAT. XRP owners are using XRP for shopping, they use it as collateral for loans, money-transfers, donations, Youtubers are paid in XRP (I need to figure out how to sign up for that!), XRP is being used to buy NFTs and, last but not least, XRP is used to pay for Adult websites.
(shaking head) Really guys? Adult websites?
And finally the third thing that getting this intervention granted does is it FORCES the judge to make a distinction between sales of XRP that occurred in various ways. Having individual holders in the lawsuit will literally force the Judge to look at various ways and methods that XRP was acquired. Some may have acquired it directly from another person, some through an exchange, some as a gift. Obviously those aren’t investment contracts. Some people probably acquired XRP NOT EVEN KNOWING what Ripple was – other than a song by the Grateful Dead. How can you be looking to a company to increase the value of something when you don’t know it even exists? Remember, the SEC is going to try and lump all sales and offerings of XRP under one big 8 years umbrella and having 10k individuals in the lawsuit will go a long way to destroying that narrative.
So, this Motion is critical because it really brings three super important things to the lawsuit table: 1. Individual stories 2. Various XRP uses by owners and 3. Various methods of XRP acquisition.
So, listen to me if you hold XRP – it is extremely important that you get involved. If you can add to one of the above categories – if you can add your story then it is CRITICAL that you get your voice in there. One of these videos gets like 100k views and Attorney Deaton says he’s only been contacted by about 6k people. So get your finger back on the keyboard and look down in the description and hit the link to reach out to Attorney Deaton and GET YOU HAT THROWN INTO THE RING.
Remember what St. Augustine said: God provides the wind, but man must raise the sails. I hope you raise your sail today. Thanks for watching.