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Ripple Vs SEC

SEC Wants to Force Ripple to Testify About Legal Advice It Obtained Regarding XRP’s Status

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The SEC has filed motion to compel Ripple to produce documents regarding any legal advice it sought about XRP’s security status

Discovery fights between the U.S. Securities and Exchange Commission and Ripple are heating up, with the SEC’s senior trial attorney, Jorge Tenreiro, filing a motion to compel the company to produce documents and testify about any legal advice it obtained regarding XRP’s status.

The SEC asserts that the defendants received “extensive advice” regarding whether or not its sales would be subject to federal securities laws as early as 2012. It claims that Ripple has withheld “at least” 657 relevant documents dated between 2013 and 2018.

The move appears to be aimed at enfeebling Ripple’s key “fair notice” defense that the SEC is attempting to quash:

If lawyers told Ripple what the law says and how to comply—based on whatever facts Ripple disclosed to those lawyers—the fairness doctrine entitles the SEC to full discovery on the notice Ripple and its employees actually received.

The SEC claims that it needs access to the aforementioned documents before the depositions of Ripple employees, including CEO Brad Garlinghouse and co-founder Chris Larsen, start in 12 days.

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The regulator has requested an informal conference on the matter.

Ripple has access to the SEC’s Bitcoin and Ethereum documents

As reported by U.Today, Magistrate Judge Sarah Netburn prohibited Ripple from getting access to the SEC staff’s informal internal communications by searching their devices.

However, she also ruled that the SEC has to produce its intra-agency memoranda regarding Bitcoin, Ethereum, and XRP, as well as its communications with third parties in accordance with her April 6 decision.

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Brad Garlignhouse: SEC Using Their Meetings with Crypto Companies as Lead Generation for Enforcement Actions

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Ripple chief accuses the SEC of picking on crypto-related companies “instead of working with the industry”

After his interview to FOX Business, Ripple CEO Brad Garlinghouse slammed the SEC for their actions against cryptocurrency businesses, including Ripple Labs.

He tweeted that rather than work with crypto companies and establish healthy regulation in the digital asset sphere, the Securities and Exchange Commission is picking on them and uses meetings with their reps as “lead generation for their enforcement actions”.

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Garlinghouse is positive that once the legal battle started by the SEC against Ripple is over, Ripple Labs will be “on the right side of the law and on the right side of history”.

Previously, U.Today reported that according to Garlinghouse, Ripple is open to settling all the issues with the regulatory agency but on one condition – if there’s absolute certainty about XRP.

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Ripple CEO Open to Settling with SEC, but Under One Condition

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Ripple CEO Brad Garlinghouse wants to find a “constructive path forward” with the SEC

During his Sept. 24 interview with Fox Business, Ripple CEO Brad Garlinghouse said that Ripple will be willing to settle with the U.S. Securities and Exchange Commission if there is “absolute certainty” about XRP. 

To the extent we can find a constructive path forward with the SEC, we, of course, want to find that. There is no scenario though when gonna to settle unless there is absolute certainty about what is XRP on the go-forward basis. 

Ripple is determined to educate the market and the judge about XRP’s utility:  

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We have a clear vision of how XRP can be an extremely powerful tool…There’s a lot of other people in the crypto community and the XRP community doing amazing things with XRP.  

Garlinghosue stressed that the XRP Ledger is a decentralized open-source technology that pre-existed the creation of the company, comparing its native cryptocurrency to oil and gold. 

 The SEC’s ambiguous statements about Ether show the lack of regulatory clarity, according to Garlinghouse. He claims that the agency has backtracked on the cryptocurrency’s securities status:     

I think there has been and continues to be a lack of clarity. 

Speaking of potential conflicts of interest, Garlinghouse said that the timing of the lawsuit was suspicious:      

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I get this question a lot. The timing stinks. It’s not a good look.  

Despite bemoaning the lack of clarity, the Ripple boss doesn’t agree with the notion that crypto is like the “Wild West,” claiming that the industry is already regulated: 

Crypto is regulated…The SEC might want more power over this. 

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Denied: Ripple’s Request for SEC’s Trading Policy Documents

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  • The US SEC had a little win against Ripple yesterday.
  • Ripple requested the SEC’s ‘trading policies governing digital assets’.
  • The judge denied the Ripple request for documents as it may ‘cause confusion’.

Yesterday, the US Securities and Exchange Commission (SEC) had a little win against Ripple. Judge Sarah Netburn denied the latter’s request for documents detailing the ‘trading policies governing digital assets’.

Based on the ruling provided by Atty. James Filan, the US magistrate judge declined to grant the defendants access to documents. To explain, the judge does not want to ‘cause confusion’ than provide any relevant findings.

Courts have ordered the regulator to disclose its crypto trading policies in the past. Ripple claims the SEC’s counsel advised that their employees are prohibited from trading XRP since the investigation began in 2019.

Ripple maintained that the SEC did not produce any formal documentary evidence supporting their claim. Additionally, Judge Netburn’s analysis in the denied motion summarized the firm’s request as,

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Defendants argue that individual trading decisions will, at a minimum, expose the lack of clarity regarding XRP’s status and whether the SEC believed XRP to be a security. Such evidence arguably would undermine the SEC’s allegations that the Individual Defendants acted recklessly and would bolster the Defendants’ fair notice defense.

In addition, Judge Netburn maintained that such arguments don’t seem to be relevant to the case as defendants have not shown such individual trading decisions bear on the issues in the case. Besides, the Privacy Act protects the financial conduct disclosures of SEC employees. Thus, Ripple had yet to prove that suspending such protections would make a material difference to the case.

While the SEC employees’ trading records might be out of bounds for Ripple now, this recent motion reaffirmed that the watchdog must provide documentation that would prove its claims that agency employees were barred from trading XRP in 2019. SEC may have won this round in the war, but it is far from over

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