More than 17,000 people have signed a petition calling for the U.S. Congress to investigate the U.S. Securities and Exchange Commission for impropriety and conflict of interest in bringing a lawsuit against Ripple Labs, owners of 55% of all the XRP cryptocurrency mined.
The petition on Change.org was begun Jan. 19 by attorney John Deaton to give voice to non-US investors of the XRP token. The petition states that foreign investors in XRP were “grievously harmed rather than protected by that agency” when the SEC sued Ripple Labs in December 2020 for allegedly selling XRP as an unregistered security. “The international holders weren’t having their voice heard and it’s frustrating,” said Deaton in an interview with Forkast. “They’ve been frustrated because of the impact that the United States has on them, and so it really is a way for them to make sure their voice is heard.”
The SEC filed suit against Ripple and two executives alleging that XRP token is an unregistered digital asset security. The closely watched SEC v. Ripple Labs’ case is expected to be decided or settled this year and will likely determine whether XRP is a security under U.S. laws. Crypto investors question why Bitcoin and Ether have not been held to the same standard.
Deaton represents over 63,000 XRP investors — from more than 60 countries and the U.S. — as “friends of the court” in the closely watched lawsuit SEC v. Ripple Labs. He said many foreign investors are citizens of countries that have officially determined XRP is not a security and have been harmed because the actions of the SEC’s suit has impeded the growth of XRP.
“The Japan Financial Services Authority has said that XRP is not a security. The United Kingdom’s Financial Conduct Authority has said XRP is not a security. Singapore, Switzerland, United Arab Emirates, they’ve all come out and said XRP is not a security,” Deaton said. “And so since we’re such a global economy, and the U.S. is such an important market, it impacts these international holders.”
He has created a dossier and a timeline that indicate “SEC officials may have colluded with outside parties to regulate cryptocurrencies in line with their personal financial interests,” the petition states. Deaton says on his law firm’s website that the evidence shows the SEC may have given Ethereum a “regulatory free pass.”
The implication that the SEC acted illegally is “out of bounds and inappropriate,” said Richard Levin, partner and chair of the fintech and regulation practice of law firm Nelson Mullins Riley & Scarborough. Levin likened the SEC to a football referee relying on a rulebook. “Attacks on the SEC are unwarranted,” he said in an interview with Forkast. “They have a job to do.”
Levin also said the petition has an extremely low chance of success. “When one party controls the executive branch and two parts of Congress, and it’s an election year, the notion that Congress is going to act on any petition is hopeful at best,” he said.
The petition is addressed to Senators Sherrod Brown and Pat Toomey, who lead the Senate Banking committee, and Representatives Maxine Waters and Patrick McHenry, who lead the House Financial Services committee. Deaton said he believes his target of 25,000 signatures would “increase the likelihood” of an investigation, despite the fact that no member of the U.S. government is elected by or represents the interests of non-US citizens.
Whether the petition actually represents only foreign investors is not clear, however. Change.org asks for country, state, city and zip code and did not block a U.S. citizen from signing it recently. Deaton’s office was unable to provide the countries of which the signers were citizens or residents.
There is also the matter of how XRP investors from any nation have been harmed by the SEC’s lawsuit. In the 13 months since the suit was filed, the price of XRP has actually risen 36% to around US$0.61.