Several investors in XRP have filed with a Rhode Island court, looking to change the course of the Securities and Exchange Commission’s case against Ripple.
In response to what it calls “the most significant SEC enforcement action in modern history,” the Friday filing is a petition for a “writ of mandamous.” A “mandamus” is effectively just an order that a public official — in this case, the chairman of the SEC — does their job. The filers are calling upon new Acting Chairman Elad Roisman to alter the course that his predecessor, Jay Clayton, set by beginning enforcement against Ripple just before his departure.
The petitioners argue that the SEC’s action operates in defiance of its statutory mandate to protect investors:
“Instead of protecting investors and sharing information to help investors make informed decisions, as required by the mission statement, the Respondent knowingly and intentionally caused multi-billion-dollar losses to innocent investors who have purchased, exchanged, received and/or acquired the Digital Asset XRP, including the named Petitioners, and all others similarly situated.”
Strangely, the XRP investors have filed their case in Rhode Island, while the Ripple case is happening in the Southern District of New York.
The SEC initially filed its case against Ripple on Dec. 22 following many months of investigation into Ripple’s longstanding sale of XRP, which began in 2013. The petition from investors takes issue with the SEC’s timeframe in filing this action and further looks to set up a contrast between Ripple’s XRP and that owned by investors:
“It’s not just legally wrong and intellectually dishonest, but it is absurd to call the XRP held by thousands of innocent investors, who have absolutely no connection to Ripple or its executives’ securities.”
The use of an apostrophe rather than a comma, while accidental, is in its own way telling.
The ultimate aim of the petition is to get the court to order the SEC “to amend its complaint against Ripple to exclude the claim that the XPR owned by Petitioners constitute securities.” Such a change, while no help to Ripple, would in theory allow the investors to go back to trading their holdings freely. Anyone holding any of XRP’s circulating supply knows that the SEC’s definition has wrecked their bottom line.
XRP’s value has collapsed since the SEC begin its enforcement. Many exchanges have announced that they are suspending or delisting XRP, which has led to a liquidity crisis for holders. This is despite Ripple founder Brad Garlinghouse’s assurances that the token would be fine in the event of such an action.