- Joseph Grundfest questions why SEC filed a lawsuit against Ripple.
- Grundfest explains that the lawsuit is unnecessary.
A former SEC commissionerÂ Joseph GrundfestÂ has questioned the purpose of the Ripple lawsuit filed by American regulators, the Security and Exchange Commission (SEC).
According to John Deaton, a crypto lawyer, he claimed Joseph Grundfest warned the SEC that investors risk losing billions considering â€œthe magnitude of an SEC enforcement actionâ€ against Rippleâ€™sÂ XRP.
The former SEC chairman reportedly wrote a letter to Jay Clayton before the Ripple lawsuit was filed questioning the motive.
Its been all crisis for Ripple since the firm locked horns with the SEC. Clarity on ifÂ XRPÂ is a security or an asset led to the Ripple lawsuit filed by Jay Claytonâ€™s SEC.
The Ripple lawsuit has resulted inÂ XRPÂ being suspended on several exchanges, a serious dip in the price of the coin/security, and a sell-off by many investors.
Why Ripple lawsuit is unnecessary
According to an anonymous Ripple spokesperson, he described Grundfest as an unpaid advisor for the firm.
Grundfest described the suit as unprecedented, given the upcoming change in power among the SECâ€™s top ranks and presidential administration.
The former SEC chairman said the objectives of a new administration and congress could differ substantially from current perspectives rendering the lawsuit â€˜unnecessaryâ€™.
He also argued that the enforcement action could harm holders ofÂ XRP, who he called innocent third-parties.
Ripple after SEC lawsuit
XRPÂ price started to plunge since the day SEC filed a lawsuit against the blockchain firm. TheÂ lawsuitÂ alleged that Ripple engaged in an illegal ICO and soldÂ XRPÂ token without registering it as security with the SEC.
However, Ripple has claimed thatÂ XRPÂ is not a security. The SEC named Rippleâ€™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 financial regulatorâ€™s legal battle.
Coinbase, Bitterex,Â BinanceÂ US, among others, have suspended tradingÂ XRPÂ since the SEC lawsuit was filed.