A federal judge in New York’s Southern District denied Tuesday a defence motion requesting the US Securities & Exchange Commission disclose its employees’ activities trading in digital assets, according to court records.
US Magistrate Judge Sarah Netburn, presiding in the case SEC vs Ripple Labs, Inc. ruled the “Defendants are not entitled to SEC employees’ annual certifications of XRP purchases, sales, and holdings.”
In her ruling, Nerburn added the SEC contends under its ethics guidance, issued 16 Jan. 2018, SEC employees are restricted from trading digital assets on the SEC’s Watch List. XRP was added to the Watch List on 13 April 2018.
The motion, filed by Ripple Labs as Defendants, is part of a larger case brought in Dec.
Judge denies sec ripple
The ongoing legal battle between the Securities Exchanges Commission (SEC) and blockchain company Ripple (XRP) has taken another twist after the presiding judge denied the regulatory agency’s motion to seal.
Court documents shared by Ripple defence attorney James Filan on June 9 indicate that SEC was also ordered to file a redacted version of the brief and exhibits as stipulated by the law.
The redacted version of the brief filing is set for a deadline of June 14 and will focus “only to the extent necessary to safeguard information sought to be filed under seal.”
“The Court also Orders that by June 14, 2022, the SEC shall file a letter explaining its proposed redactions and specifying which exhibits it seeks to seal. Essentially the Court agreed with Ripple and said that the SEC was trying to seal more than necessary,” said Filan.
But the sale of XRP coins is purported by Ripple to have not been a security offering or initial coin offering (ICO) at all.
This legal battle is sure to lay the grounds for further government litigation over crypto projects. The crux of the SEC’s argument is that XRP is a security rather than a currency. Of course, Ripple denies these claims, asserting that XRP is a currency with a function.
The company says its function is to conduct cross-border payments with little-to-no fee to the user.
Ripple’s argument is further supplemented by the company’s compliance with ISO 20022, a new standard language for international banking. The XRP crypto is one of the only digital currencies compliant with the standard. Many investors see this compliance as enough evidence that XRP is a currency rather than an asset.
Still, the case drags on.
Judge denies sec ripples
- Asset Management
- Capital Markets
Nature of Suit
- Cleary Gottlieb
- Debevoise & Plimpton
- Kellogg Hansen
- Paul Weiss
- Ripple Labs Inc.
- U.S. District Court for the Southern District of New York
In the latest developments, Judge Analisa Torres has denied SEC’s motion to strike Ripple’s make-it-or-break-it “fair notice” defense. Ripple CEO, Brad Garlinghouse has taken to Twitter to describe the ruling as a “huge win” for the defendants, saying ”If you weren’t paying attention then, you should be now.
Huge win for Ripple today!”
He continued ”And while we would have preferred the cases against Chris and me to end now, the SEC must now prove its claims.
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Ripple (XRP-USD) holders may have started the week celebrating, but it doesn’t look like the company’s out of the woods yet. Rather, Ripple is still deeply embroiled in the lawsuit levied against it by the U.S. Securities & Exchange Commission (SEC). Sure, an earlier XRP lawsuit update may have indicated the end is in sight.
However, reports now say Ripple is still facing adversity in court.
Ripple is now well over a year into its legal battle with the SEC. Beginning in late 2020, the government entity claims Ripple conducted an illegal security offering worth $1.3 billion.
As reported by U.Today, the court ordered the SEC to turn over an email with a draft of the infamous Ethereum speech that was given by former top SEC official William Hinman among other documents. Back in June 2018, Hinman said that Ether, the token underpinning the largest network, wasn’t a security, at a conference in San Francisco.
The SEC argued that these documents were protected by the DPP in order to continue withholding them.
The judge, however, opined that the personal views of the agency’s staff were not shielded by the privilege.
SEC’s request for clarification of that ruling,” he said.
The SEC sought partial review or clarification of the Court’s January 13, 2022 Order, which concluded in pertinent emails discussing and draft versions of a June 14, 2018 speech made by the then Director William Hinman.
What did the District Judge state?
Per the court document the speech and emails “are not shielded by the deliberate process privilege.”
In addition, the document states:
“The SEC’s assertion that the Speech was intended to communicate Corporation Finance’s approach to regulating digital asset offerings is inconsistent with the SEC’s and Hinman’s previous position that the Speech was intended to and did reflect his personal views”
“The SEC seeks to have it both ways, but the Speech was either intended to reflect agency policy or it was not.
SEC’s sealing request
SEC had requested the court order sealing the agency’s letter in opposition to the motion by six XRP investors to file a brief regarding the opinion of one of the SEC’s experts.
The latest ruling comes after presiding judge Sarah Netburn held an SEC-Ripple conference regarding SEC’s claims that then-director William Hinman’s speech-related documents fall under the attorney-client privilege.
However, court documents indicate that the deliberate process privilege does not shield speech.
The SEC has relentlessly attempted to shield the Hinman documents from the Ripple defence.
Hinman speech, which the SEC has fought to keep under wraps, has been seen by many in the XRP community as a pivotal piece of evidence that could work in favor of Ripple Labs.
The SEC sued blockchain firm Ripple in late 2020 on allegations that senior executives Brad Garlinghouse and Christian Larsen sold Ripple’s XRP tokens as unregistered securities.
However, Ripple has argued that the speech made by former director of the Division of Corporation Finance Bill Hinman in 2018 stated that Ether (ETH) did not constitute “securities transactions” — contradicted to the SEC’s stance on the matter.
Barring any further appeals or delays, the ruling states that: “The documents must be produced.”
Delphi Digital’s general counsel Gabriel Shapiro called it a “big tactical win for Ripple” in a July 12 tweet.
Some believe that an appeal by the SEC is likely.
Ripple seems confident it can come to a close this year. Last week, documents surfaced suggesting that the trial will end between August and November of 2022, barring a settlement. However, news today suggests a closure will not be so soon.
XRP Lawsuit Update: Judge Denies Motions, Creates Setbacks for Ripple
Investors began celebrating an end to the trial over the past weekend, thanks in large part to news that a judge was denying a crucial SEC motion. However, a recent XRP lawsuit update suggests Ripple isn’t quite as far ahead as investors had thought.
Today, news is showing that both the SEC and Ripple have been denied important motions. The first half of this news — that the SEC had been denied a motion to strike Ripple’s fair notice defense — surfaced on Saturday.
CEO Bad Garlinghouse described it as a “huge win for Ripple” which would draw more attention to the case.
If you weren’t paying attention then, you should be now. Huge win for Ripple today! https://t.co/dMeUQuIPHM
— Brad Garlinghouse (@bgarlinghouse) March 11, 2022
Stuart Alderoty, the general counsel for Ripple, commented, “Good to see the Judge rejecting the SEC’s attempt to prevent Ripple from pursuing its fair notice defense. It’s even more imperative that the sun sets on the SEC’s ‘regulation by enforcement’ approach.”
And while Ripple celebrated the ‘win,’ it also saw its own motion denied by Judge Torres.
Garlinghouse and former CEO and now chairman Chris Larsen had filed a motion seeking charges against them dismissed.