John E. Deaton, an attorney who focuses on the cryptocurrency sector, among others, yesterday posted a thread on Twitter that shed further bad light on the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs. The lawsuit was filed just days before Christmas last year and the departure of SEC Chairman Jay Clayton, which is why there were voices that suspected unknown motives on the part of high-ranking officials behind the lawsuit.
Former SEC commissioner warned that investors could lose billions.
John Deaton claimed that the SEC was warned by Joseph Grundfest, a former SEC commissioner under U.S. President Ronald Reagan, that investors could lose billions considering “the magnitude of an SEC enforcement action” against Ripple’s XRP. Grundfest reportedly sent Clayton a letter before filing the lawsuit, wherein he warned in detail of the consequences and also questioned the motives. According to Deaton, former SEC commissioner warned that the mere filing of the lawsuit, declaring XRP unregistered security, “would result in an UNPRECEDENTED scenario of billions of dollars in losses resulting from an exodus of intermediary market service providers.”
Ripple continues to face trouble over the SEC lawsuit.
XRP price started to plunge since the day SEC filed a lawsuit against the blockchain firm. The lawsuit alleged that Ripple engaged in an illegal ICO and sold XRP token without registering it as security with the SEC. However, Ripple has claimed that XRP is not a security. The SEC named Ripple’s current CEO Brad Garlinghouse and co-founder Chris Larsen in the lawsuit. Ripple is determined to fight the lawsuit and is working towards fighting the legal battle with the financial regulator. Since the SEC filed the lawsuit, several crypto exchanges in the U.S. have delisted the XRP cryptocurrency from their platforms.