Ripple’s attorneys will comb through the SEC’s internal crypto debate for mentions of XRP.
Ripple Labs has been given access to Securities and Exchange Commission records “expressing the agency’s understanding or opinions” on crypto properties.
According to Law360, U.S. Magistrate Judge Sarah Netburn granted the defendants’ motion “in large part,” determining that SEC minutes or memos concerning crypto are likely discoverable. Netburn asserted staff-to-staff email communications do not need to be produced.
Netburn also enabled the SEC and Ripple to challenge the decision.
The SEC filed a complaint in December claiming that Ripple Labs, its CEO Brad Garlinghouse, and chairman Christian Larsen received $1.38 billion in August 2013 from an unlicensed protection offering.
Ripple also contested the SEC’s suit, arguing that XRP is similar to Bitcoin or Ethereum, both of which the SEC has listed as securities, and blaming the regulator for taking eight years to file its case against Ripple.
According to Law360, Garlinghouse’s lawyer, Matthew Solomon, argues the SEC’s suit could be “game over” if they discover proof that the regulator has deemed XRP similar to BTC or Ether, adding that the SEC’s regulatory purview does not stretch outside shares.
Provided that the SEC took eight years to file its case against Ripple, the firm’s lawyers say they can undermine the SEC’s arguments if they can provide evidence indicating conflicting determinations on the regulator’s classification of XRP.
“We need this discovery to defend ourselves,” Solomon stated.
However, SEC counsel Dugan Bliss has criticized the defendants for seeking to put the commission “on trial” by scrutinizing its internal deliberations, rather than defending its allegedly illicit actions, stating:
“The actions of the promoter are what need to be the focus here.”
During the hearings, Judge Netburn noted that there was a lot of public interest in the hearing, with over 500 people dialling in to a public phone line to watch the proceedings. The judge also gave a notice to one person for rebroadcasting audio from the trial in breach of New York law.
“Whoever is engaging in this conduct may be subject to criminal sanctions,” the judge said.
Outside of court
On April 6, attorney Jeremy Hogan, who is observing the case with interest, took to Twitter to share a 2016 cease-and-desist order aimed at a then-advisor to Ripple Labs that described the firm as a “digital currency company.”
(1/2) I am prepping for the SEC v. Ripple hearing and did a deep-dive into some docs, and LOOK WHAT I FOUND. It’s the SEC stating in a public document “…the digital CURRENCY company called Ripple Labs.” (top of pg.3)https://t.co/dFAtp8kiqa
— Jeremy Hogan (@attorneyjeremy) April 6, 2021
“The SEC must now explain to the Court how a ‘digital currency’ transformed to a ‘digital security,’” added Hogan.
The price of XRP has been on a tear this month despite the SEC’s complaint, with the token up nearly 100% since the start of April. XRP is up roughly 20% over the past 24 hours and is currently trading for $1.08.
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