The SEC has explained the difference between XRP and Bitcoin to the judge.
During a March 19 hearing, Jorge Tenreiro, a senior trial attorney at the U.S. Securities and Exchange Commission, told Magistrate Judge Sarah Netburn that XRP cannot be compared to Bitcoin and Ethereum, refuting the talking points of Ripple CEO Brad Garlinghouse’s legal counsel Matthew Solomon:
Mr. Solomon tries to say that “we are no different than Bitcoin and Ether”. As Ripple’s own lawyers told them, you are not like Bitcoin because you are one entity that has created these assets. That is fundamentally different.
Tenreiro also called into question XRP’s utility, adding that any of Ripple’s efforts to create use cases for the token actually prove that it is a security:
We dispute whether this utility actually exists, your honor. But the point is: even if it did exist, Ripple and the defendants’ efforts to develop a use for XRP is what makes XRP a security.
During Solomon’s presentation, Netburn asked whether having a utility distinguished XRP from Bitcoin and Ethereum, the two cryptocurrencies that the SEC doesn’t consider to be securities:
It might not be relevant to the issue, but it’s important to understand. My understanding of XRP is that not only does it have a currency value but it also has a utility and that utility distinguishes it, I think, from Bitcoin and Ether. Is that correct?
As reported by U.Today, several banks whose customers are Garlinghouse and Ripple co-founder Chris Larsen have been served subpoenas by the SEC, but the defendant moved to quash them.
Tenreiro explains that every sale of XRP by the executives constitues a Section 5 violation, which is why they need to know the whole scope of sales. When asked by the judge, he clarified that it didn’t concern every individual who’s selling the token:
Fundamentally, the SEC needs to be able to establish all of the sales that occurred. It’s not required to take their word for it.
The SEC attorney also revealed that the agency had developed evidence that Garlinghouse managed to camouflage some of his XRP sales:
We’ve also developed evidence that…Ripple, Garlinghouse, and another entity that they used to sell XRP intermingled their XRP sales to one of the market makers.
XRP Lawsuit: SEC aims to make XRP skip the bull run with an Expert Discovery Extension Appeal
The latest update in the XRP lawsuit saw the SEC file a letter requesting the Court to extend the expert rebuttal report deadline to November 12, 2021, and the expert discovery deadline to January 14, 2022, from the former date of November 12, 2021. The plaintiff noted that the extension will allocate both parties sufficient time to prepare rebuttal reports and depose a minimum of 14 expert witnesses.
Ripple Opposes SEC extension appeal to save XRP from an isolated bear run
While consenting to the extension of the rebuttal report deadline until November 12, Ripple opposes the January 14 deposition deadline to avoid the case from stretching long enough for XRP to entirely miss the bull run. Furthermore, Ripple also intends to file an opposition to this letter motion on October 18, 2021.
The SEC offered a compromise to Ripple, preponing the expert discovery extension to December 22, but the defense has rejected that offer as well. Ripple argues that the extension would “would likely impact the briefing schedule for summary judgment motion[s].”, as post-December 10, 2021, the Thanksgiving holidays will commence the holiday season.
SEC supports extension appeal with pending motions
The SEC objects that the case is even less ready for summary judgment motions as expert discovery has commenced with an incomplete factual record. The commission noted that on September 1, 2021, Magistrate Judge Netburn granted the SEC’s motion to compel Ripple to produce certain instant messages among its employees, but Ripple has not completed its production of responsive documents and has not provided any timetable by which it will be complete. Along with the incomplete discovery of a granted motion, the plaintiff states that the parties have a total of four pending discovery motions before Magistrate Judge Netburn. The plaintiff claims that even if one motion is granted, the parties will require an additional extension to proceed with the discovery.
“If Magistrate Judge Netburn grants any of the pending motions to compel, at minimum, the parties would need additional time to review and produce the documents at issue…The SEC’s proposed extension is fair and reasonable under the circumstances and should be granted for good cause.”, stated the SEC.
SEC v. Ripple Labs: Agency opposes motion to seal documents citing ‘influence’
The SEC v. Ripple Labs lawsuit is in the news today after yet another crucial development. According to the latest updates from the court, the regulators have responded in opposition to Ripple’s motion to seal transcripts of audio and video recordings from internal meetings.
As per the filing shared by @CryptoLawUS, the SEC claimed that the documents “have the tendency to influence the Court’s ruling on the discovery dispute before it.” The tables turned for Ripple when SEC added that “no countervailing business or privacy interests outweigh their disclosure to the public.”
On 30 August, the SEC had filed a motion to compel the production of some audio and video-taped recordings after Ripple failed to disclose them during discovery. Ripple agreed to produce these recordings, along with “all recorded meeting by the custodians of such meeting, meeting name, and other criteria” for responsive documents.
The SEC later filed another motion to compel Ripple on 1 October to conduct a “reasonable search.” Here, the intent was to find more responses through recordings of meetings at which the agreed-upon custodians spoke.
The SEC has been trying to make the documents public since it found statements made by Ripple CEO Garlinghouse and other key Ripple employees. The filing added,
“These transcripts contain statements by Garlinghouse and other key Ripple employees that bear directly on whether Ripple’s offers and sales of XRP are “investment contracts” and therefore securities under SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946), and whether Garlinghouse and Larsen had the requisite scienter for purposes of the SEC’s aiding-and-abetting claims.”
Although the concerning statements from the transcripts have been redacted, according to the SEC, Ripple is also seeking to seal excerpts of Garlinghouse’s deposition testimony. The same apparently pertains to the frequency of “all-hands” meetings, along with a certain email from the CEO.
The SEC also argued that the transcripts of the recordings are Judicial Materials. Ones that should be disclosed to the public. Curiously, attorney Jeremy Hogan believes that the recording may be the backbone of the SEC’s case.
Nevertheless, only the Court’s decision will reveal the importance of the recordings for the people, Ripple, and the SEC.
Ripple Exec Leaves for Crypto Firm Advised by Former SEC Chair
Cassie Craddock has a new job at Fireblock after more than four years at Ripple
Ripple’s ERG lead, Cassie Craddock, has parted ways with the company, she announced on Wednesday.
After 4 wonderful years at #Ripple, it’s time to move to a new challenge. Delighted to be joining the @FireblocksHQ team here in London. Exciting times! 🤩— Cassie Craddock (@CraddockCJ) October 13, 2021
She has left the San Francisco-based company to join digital custody provider Fireblock as its director of sales.
Fireblock raised $310 million back in July after wrapping up its Series D funding round, which lifted the company’s valuation to $2.2 billion.
Notably, former U.S. Securities and Exchange Commission boss Jay Clayton, who infamously slapped Ripple with a lawsuit during his last days at the agency, joined Fireblock as an advisor back in August.
Craddock became part of Team Ripple in August 2017 as the company’s new manager of business development, according to her LinkedIn profile.
She was initially responsible for developing new use cases and products.
Craddock was later promoted to Ripple’s director of sales in Europe and then landed her final stint at the company as an ERG leader.