The court has delivered another blow to the SEC
Distributed ledger tech provider Ripple has scored yet another significant win against the U.S. Securities and Exchange Commission.
Magistrate Judge Sarah Netburn has denied the SEC’s motion to get access to any legal advice Ripple sought or received regarding XRP’s regulatory status.
The decision has bolstered Ripple’s fair notice defense that is based on the premise that the agency failed to warn the company and other market participants about the fact that the cryptocurrency is an unregistered security.
As reported by U.Today, the SEC’s senior trial attorney Jorge Tenreiro claimed that it would be “game over” for Ripple if it chose not to follow its lawyers’ legal advice during a May 21 telephonic conference on the matter:
What if their lawyer told them, you still have to deal with the SEC? That would be game over for their defense, that they were confused. We don’t know what they have given the exchanges.
Yet, the judge says she takes “no position” on whether or not the defense is cognizable and meritorious:
The Court takes no position about whether Ripple’spleadeddefense is cognizable or if it will prove meritorious. I reach only the limited question of whether Ripple put its subjective state of mind or advice of counsel at issue merely by raising the defense, thus waiving its privilege.
In late April, the SEC filed a motion to strike Ripple’s defense, describing it as “legally improper” while citing its numerous enforcement actions.
The securities watchdog can renew its application if Ripple relies on its privileged communications to support its fair notice defense, according to the court order.