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Ripple Vs SEC

XRP Lawsuit: Securities expert, Attorney Tessler to offer technical consultancy to the court

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The latest development in the XRP lawsuit saw the court granting Attorney Lilya Tessler’s plea to practice Pro Hac Vice as counsel for amicus curiae, on behalf of the Chamber of Digital Commerce. It translates to Sidley Austin LLP’s Attorney Tessler offering the court her advice in her expertise of securities offering, which happens to be the crux of the problem in the ongoing XRP lawsuit.

Attorney Tessler job profile includes legal counsel to digital asset exchanges on SEC regulatory inquiries

Lilya Tessler, partner and head of Sidley’s FinTech and Blockchain group has a concentrated practice around representing digital asset trading platforms, blockchain technology companies, U.S. and non-U.S. broker-dealers, financial service firms, and cryptocurrency funds. Specifically, Tessler provides legal advice to technology companies on public and private securities offerings, including blockchain token distributions.

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Furthermore, she advises financial institutions and digital asset exchanges on routine securities issues, private placement agent requirements, custody rule requirements, cross-border regulatory issues, money services business registration requirements, as well as FINRA and SEC regulatory inquiries.

Ripple could bounce back with Tessler addition

With Attorney Tessler’s job profile and background in protecting the crypto community from unjust regulators, it is fair to speculate the XRP lawsuit could gravitate back, toward Ripple’s side. However, under Pro Hac Vice’s practice as counsel for amicus curiae, Tessler’s legal advice must come from a neutral ground. Yet, it is hard to decipher a definite outcome of Attorney Tessler’s addition to the historically controversial XRP lawsuit.

One after another extensions, letter motions, and now new counsel’s addition to the case has thickened the plot even further. Till yesterday, the ball was in SEC’s court with Ripple desperate for a settlement. However, this lawsuit’s plot twists happen overnight. Now that there is heavy speculation of Ripple getting back in the game, the defendants have filed another letter motion to compel against the SEC.

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Defense files another letter motion to compel against the plaintiff

Ripple and individual defendant, Larsen has filed a Motion to Compel the SEC to answer interrogatories related to the SEC’s Howey Test application theory. The theory claims that it applies to virtually all of Defendants’ transactions in XRP, over the last 8 years. The SEC refused to provide any information, upon Ripple’s attempt at seeking to identify how the SEC contends Howey applies to all these transactions.

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Ripple Vs SEC

Judge Grants SEC’s Request To Extend Discovery Phase of Lawsuit With Ripple by Two Months

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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.” 

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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.”

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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.’

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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.”

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Ripple Vs SEC

XRP Lawsuit: Ripple appeals the Court to Disclose SEC’s in-camera review documents

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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.

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“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.

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SEC v. Ripple – Court orders plaintiff to ‘answer Ripple’s interrogatories’

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Within 24 hours of the court approving the Securities and Exchange Commission’s request to postpone the discovery deadline to January 2022, Judge Sarah Netburn has responded to two pending motions in the SEC v. Ripple Labs lawsuit.

One of the motions was from defendants Ripple Labs and Chris Larsen to compel the SEC to supplement its responses to eleven of its interrogatories and two of Larsen’s. Meanwhile, the other motion from the SEC sought a protective order to relieve it of the obligation to respond to 29,947 separate requests for admission, as per the filing.

Judge Netburn has now granted and denied both motions in part.

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The judge ordered the SEC to answer Ripple’s interrogatories and identify the specific terms of the “investment contract” from XRP sales. The order added,

“Ripple’s interrogatory is relevant (and precise) and will clarify whether the SEC contends that the terms of any contract identified in response to Ripple’s Interrogatory No. 1 created an expectation of profits by the purchaser of XRP.”

“Accordingly, Defendants’ motion regarding Ripple Interrogatory No. 2 is GRANTED, and the SEC must supplement its response to Interrogatory No. 2 to identify any specific contractual terms and not just implicit and explicit promises as previously identified.”

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The SEC must also respond to whether it contends that “efforts by Ripple were necessary to effect any increase in the price of XRP.” The court granted most of the defendants’ motions to compel answers on interrogatories, except one.

This was the motion from Chris Larsen on when XRPL is fully functional. Judge Netburn denied it without prejudice for being “too vague,” with the parties ordered to confer clarity terms.

Meanwhile, the SEC’s motion for protective orders was also partially granted and denied. The judge granted protection on Defendants’ 28,849 RFAs, noting that “it is hard to view this stunt as anything more than theater.” The order added,

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“The motion for a protective order is GRANTED on burden grounds. Having granted the motion to compel a response to Ripple’s Interrogatory No. 2, the protective order is also GRANTED as cumulative and duplicative of another form of admissible evidence.”

As the SEC and Ripple filed their responses, the timeline for the case may extend due to the postponement of the discovery deadline. This deadline was pushed so that the parties could complete the expert depositions and beef up their preparations.

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