The U.S. Securities and Exchange Commission (SEC) is voicing opposition against allowing XRP holders to intervene in its lawsuit against Ripple.
In a letter to U.S. District Judge Analisa Torres of the Southern District New York, the SEC reasons that if the court grants the motion, other XRP holders, including large class investors who have already sued Ripple in the past, will likely want to join as intervenors in the case.
This scale of intervention, ‘Would cause incalculable confusion, add unmanageable complexity, and bring this Court’s review and administration of the underlying actions to a halt.’”
Lawyer John Deaton earlier filed a motion to intervene on behalf of 10,000 other XRP holders in the SEC proceeding against the San Francisco-based blockchain firm, in which the regulatory agency accuses Ripple of unlawfully selling securities in the form of XRP.
Ripple, on the other hand, says that XRP holders should participate in the litigation. In its letter to Judge Torres, the startup cites the need to clarify the ambiguities in SEC’s complaint.
“SEC’s amended complaint fails to explain whether the SEC has alleged and will seek to establish in this litigation that XRP is an investment contract per se, and thus a security per se, or instead that Defendants’ sales of XRP resulted in an investment contract based on the circumstances of those sales.
Given this ambiguity, and the potential precedential impact of this litigation on non-parties, Defendants agree that Intervenors should be permitted to proceed with their motion to clarify this point.”
Coinbase CEO Claims Ripple Lawsuit is Turning Out Better, XRP Community Demands Relisting
The Ripple vs SEC lawsuit continues to drag further with both parties making key arguments. However, many crypto proponents believe Ripple has an upper hand in the case especially with the former SEC executive William Hinman’s deposition and the glaring red flags on Ethereum getting a free pass with a similar business structure. Amid growing support for Ripple and against the SEC, Coinbase CEO Brian Armstrong has come out to claim Ripple is doing better in the lawsuit than expected. He said,
“The Ripple case seems to be going better than expected. Meanwhile, the SEC is realizing that attacking crypto is politically unpopular (because it harms consumers).”
When SEC first filed the lawsuit against Ripple in December, everyone proclaimed it an end of the road for the XRP token. This was mainly because it was for the first time that the SEC had also accused the founders of the project in the security lawsuit. However, as the case progressed and SEC started to go after several crypto firms claiming security law violations, people realized SEC’s pure vendetta and started siding with Ripple.
Coinbase is also one of the victims of the SEC vendetta as the chief regulatory body forced the largest public crypto exchange in the US to drop plans for an unreleased USDC-pegged lending product despite the crypto exchange trying to communicate with the agency for six months.
XRP Community Wants Coinbase to Relist XRP
Ripple continues to forge new partnerships and expand its remittance business outside the US, thus the lawsuit didn’t hamper Ripple’s progress as more than 90% of its businesses are located outside the US. However, the native token XRP took the biggest hit from the lawsuit as the price slumped in the wake of mass delisting across the US-based exchanges. Thus, when Armstrong showed his support for Ripple, the XRP community demanded relisting.
Judge Grants SEC’s Request To Extend Discovery Phase of Lawsuit With Ripple by Two Months
A federal judge has granted the U.S. Securities and Exchange Commission’s (SEC) request to extend the discovery phase of its lawsuit against Ripple by an additional two months, according to new case documents.
Judge Sarah Netburn says in a new order that the additional time requested by the SEC will not impact “the schedule to resolve the case.”
“Rather, the additional time sought by the SEC will allow both sides to complete the outstanding fact discovery and properly prepare for expert depositions.”
The discovery phase is a pre-trial stage of a lawsuit where both parties present relevant information and evidence.
The SEC asked to extend the deadline for expert discovery from November 12th to January 14th, citing the need for “sufficient time to prepare rebuttal reports and depose a minimum of 14 expert witnesses.” The regulator argued such an extension wouldn’t extend the case’s timeline.
Ripple opposed the January 14th extension, arguing that expert discovery should only be extended to December 10th, saying the two-month extension “would needlessly prolong discovery.”
Attorney and crypto legal expert Jeremy Hogan, who is a Ripple supporter, disagrees with Judge Netburn about the extension’s impact on the lawsuit’s timeline.
Says Hogan on Twitter,
“Well, that is ‘no bueno.’
Judge argues that the additional time will not affect the schedule to resolve the case, but I don’t see how that is possible; it HAS to affect the schedule for briefing summary judgment.
Case summary judgment resolution now not until March-May 2022.”
XRP Lawsuit: Ripple appeals the Court to Disclose SEC’s in-camera review documents
The latest update in the XRP lawsuit saw Ripple respond to SEC’s letter with the explanation for its privilege assertions along with a redacted version of the three additional documents requested by the defendants for in-camera review. Ripple has requested the court to disclose these documents to the defense and has further continued to argue against the plaintiff’s repetitive “privileged” stance.
Ripple objects to SEC’s entitlement to keeping secrets under DPP
Ripple has contended SEC’s “pre-decisional” or “deliberative” argument for the three additional documents, noting that the commission has failed yet again to identify any specific policy process related to these or other documents, as it is required to when seeking protection under DPP. Ripple argued that the SEC claims against disclosure of discussions are weak and do not stand any legal relevance.
SEC asserts that “how to structure a forum the SEC intends to use to communicate with industry participants” is deliberative or would reveal its “mode of formulating or exercising policy-implicating judgment,”. However, the defense objects to the plaintiff’s assertions’ insufficiency to invoke DPP and states that if this argument is considered valid in the court, then that would extend the invalid privilege to virtually every document or communication in a federal agency.
“The fundamental problem with the SEC’s approach is that the agency apparently believes that it is entitled to operate in secret, and to withhold from actual litigants, whose reputations and livelihoods are at stake due to its own affirmative litigation choices (as opposed to the general public pursuant to FOIA), any internal documents that relate to its mission, broadly defined. This approach finds no basis in law because it turns on its head Congress’ lawfully enacted presumption of openness in government documents, subject to circumscribed, narrow exceptions.”
While the Court granted Ripple’s September 24 appeal, seeking the addition of three documents by the SEC for in-camera review, it still has not permitted disclosure of mentioned data to the defendants. These documents include the two documents related to the SEC’s meetings with law firms, along the email trail concerning discussions with a third party who received guidance from the SEC to analyze its digital asset under the framework set forth in Hinman’s June 14, 2018, speech.