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Ripple’s Lawsuit: Why SEC Ignores Jed McCaleb?

One of the biggest XRP holders, Jed McCaleb sold the last of his XRPs this weekend, earning $3.09B and 708 Bitcoins in total since 2014. Ripple’s attorney John Deaton today inquires why he is not under the radar of the Securities and Exchange Commission (SEC) and blames the agency for being “insanely inconsistent and illegitimate” in its claims against Ripple. 

According to Deaton, McCaleb earned $2.56B from XRP sales since the date the lawsuit was filed and should have violated Section 5 of the Securities Act, following the SEC logic.

The SEC filed a complaint against Ripple and its executives in December 2020, claiming that Ripple raised over $1.3 billion through its ICO selling from 2013 to 2020. 

According to SEC, the company unlawfully sold XRPs as securities unregistered with the SEC and thus violated the Securities Act. Meanwhile, executives Brad Garlinghouse and Chris Larsen made significant gains in the process, as the SEC stated.

In a meantime, Ripple’s attorney John Deaton wonders why SEC excludes Jed McCaleb if it claims that “XRP is a security and anyone who sells it is violating the Securities Act”. 

“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,” says attorney John Deaton. 

Deaton further claims that the situation illustrates “how insanely inconsistent and illegitimate the SEC’s claims [against Ripple] are”. This is the key reason why he doubts whether SEC itself believes in its alleges that XRP is a security.

If the SEC truly believed today’s XRP is a security, it would have attempted to prevent Ripple from selling XRPs on an ongoing basis first, says Ripple’s attorney. Secondly, the SEC would have used a cease and desist letter to the former Ripple co-founder to stop his XRP sales, he states.

The commission has not done any of this, though. Meanwhile, its silence led Ripple’s attorney to question whether the XRP case wasn’t filed for the “sole purpose of enforcing securities laws”.

McCaleb Sold His Last XRPs

As one of the three initial developers of Ripple Ledger, Jed McCaleb was granted a massive stake in the XRP holdings back in 2012, when Ripple Ledger was launched. According to Ripple, together with Chris Larsen and Arthur Britto, he retained 20 billion XRP coins at a time. In other words, one-fifth of its total 100 billion supply.

McCaleb left Ripple in 2013 after having difficulties with the leadership team, the ex-employee reportedly held around 9 billion XRPs since then. Although developer agreed to gradually sell his holdings to prevent severe price fluctuations, XRP community for years has been wary of his downward selling pressure.

By selling the last part of his holdings, Jed McCaleb finally emptied his XRP wallet this weekend leaving it with a balance of a bit over 32.2912 XRP or $11.5 at the time of writing. 

The market reacted by bringing the XRP price up more than 7.2% on Monday to $0.3683, the highest level in more than two weeks. With more than 48.23B coins in circulation and a $17.5B market cap, Ripple’s XRP is still 89.3% down from its $3.40 all-time high reached in January 2018. 

 

Read more on the Ripple Vs SEC lawsuit:

Lawsuit Swings in Ripple’s Favor as Judge Denies the SEC’s Attorney-Client Privilege Claims

SEC Vs Ripple: Hinman Related Hearing Suicidal for SEC?

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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Author

Simona is a fintech journalist and content editor at DailyCoin Academy, which focuses on educating new crypto investors. She entered the crypto space in early 2018, got burned, but discovered a passion for trading, and now it’s her hobby. Simona covers crypto and blockchain-related topics and takes a deeper look at what lies behind the latest industry trends.