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Ripple’s legal battle with US regulators is still ongoing.
Ripple has achieved another victory in its continuing legal struggle with the Securities and Exchange Commission of the United States, as the court has refused the SEC access to Ripple’s legal counsel.
The SEC’s attempt to force Ripple to reveal documents discussing XRP sales with the firm’s attorneys was denied by Magistrate Judge Sarah Netburn of the District Court for the Southern District of New York on Sunday.
According to the SEC, Ripple could have been aware that XRP could be a security from its legal advisors before moving forward with its token sale back in 2013. The SEC filed a motion on May 7 to compel Ripple to produce all communications discussing any legal advice Ripple sought or received as to whether its offers and sales of XRP would be subject to federal securities laws.
Netburn pointed to the attorney-client privilege in the recent judgement, which is intended to “encourage full and frank communication between attorneys and their clients and thus promote broader public interests in the observance of law and administration of justice.” Ripple has not renounced its attorney-client privilege, despite the fact that defendants can renounce it in specific instances, according to the judge.
The ruling also pays special attention to the rule of fair notice, which requires the courts to construe ambiguous criminal statutes in favor of the defendant. In asserting this defense, Ripple claims that the SEC failed to provide market participants with fair notice that the regulator considered XRP a security.
“In support, it cites to the SEC’s eight-year delay in pursuing enforcement action against Ripple for its alleged securities violations — even after XRP was listed on over 200 cryptocurrency exchanges, billions of dollars of XRP sales transactions had taken place, and Ripple had entered a settlement with the U.S. Department of Justice and FinCEN that described XRP as a ‘convertible virtual currency,’” Netburn wrote.
The judge noted that the SEC may renew its motion application if Ripple “raises its beliefs or relies upon its privileged communications in support of its fair notice defense.”
The recent verdict is another step forward in the SEC’s struggle with Ripple. In December 2020, the SEC filed a complaint against Ripple Labs, CEO Brad Garlinghouse, and executive chairman Chris Larsen, saying that XRP constituted a $1.3 billion unregistered securities sale. Ripple has won a number of legal victories, including access to internal SEC conversation histories on cryptocurrencies in April. The judge also refused the SEC access to Garlinghouse and Larsen’s financial records.
Last week, Garlinghouse confirmed Ripple’s plans to go public after the firm resolves its case with the SEC, stating that the likelihood of this scenario was “very high at some point.”