Attorney John Deaton has expressed the level of inconsistency and illegitimacy of SEC’s claims against Ripple for its failure to also sue Ripple co-founder and former CTO, Jed McCaleb, who has been selling his 9 billion XRP since 2014.
It’s no longer news that Jed has sold all his XRP. It was even officially confirmed by Ripple a couple of hours ago via a blog post.
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In a series of tweets, John Deaton showed that the regulator has been hypocritical. He said SEC claims that XRP is a security and whoever sells it is violating Section 5 of the Securities Act, which is why Ripple and two of its top executives were sued in December 2020. But Jed McCaleb, who earned $2.56 billion from sales of the same asset deemed as security is walking free with no case to answer.
John Deaton noted:
“The SEC claims XRP itself is a security and anyone who sells it is violating Section 5 of the Securities Act. The SEC claims Ripple Brad Garlinghouse & Chris Larsen “enriched” themselves at the expense of investors and it is seeking $1.3B in disgorgement from these defendants.
“Yet, the co-founder, Jed McCaleb, earned $2.56B from sales of XRP SINCE THE DATE THE LAWSUIT WAS FILED! That is nearly DOUBLE the amount the SEC seeks from the Defendants that were sued. It should be noted, Ripple has also sold XRP since the lawsuit was filed as well.
SEC’s Allegations against Ripple Are Inconsistent and Illegitimate
John Deaton continued by stating that he’s not saying Jed did anything wrong, but this shows that SEC’s claims against Ripple and its executives are inconsistent and illegitimate.
Deaton said if SEC is sure of its claims, it could have sought a preliminary injunction against Ripple and prevent “Ripple from selling XRP on an ongoing basis”, similar to how Telegram was treated. He said SEC would have also prevented Jed from selling XRP further.
“Let me be clear: I don’t believe Jed McCaleb did anything wrong. It’s his XRP and he is free to do with it as he sees fit – assuming he complies within the bounds of the law. But, if you accept, the SEC’s allegations as true, he has been violating the law and enriching himself.
“I raise this issue to only demonstrate how insanely inconsistent and illegitimate the SEC’s claims are. If the SEC truly believed today’s XRP is a security, it would have done two things without hesitation: 1) The SEC would’ve sought a preliminary injunction against Ripple.
“That’s exactly what it did VS Telegram. It would attempt to prevent Ripple from selling XRP on an ongoing basis. Think about it. Ripple gets to sell XRP, an illegal security, to pay for Ripple’s defense to win the case and allow them to continue to sell illegal securities.
“If it’s clearly illegal you don’t allow the Defendant to keep breaking the law so they can pay their attorneys to make sure that they can continue breaking the law. 2) The 2nd thing they would’ve done is used a cease and desist letter to the co-founder to stop his sales. Why?
“Because now they have to face the fact that Jed has made twice more than the people they sued – for doing exactly what they claim is unlawful and immoral. But you only do the things I’ve mentioned if you truly believe in what you’re alleging.
“Almost sounds like the Ripple XRP case wasn’t filed for the sole purpose of enforcing securities laws does it?”