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Ripple Vs SEC

SEC v. Ripple Labs: Agency opposes motion to seal documents citing ‘influence’

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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.

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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.

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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.

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Ripple

Ripple vs. SEC Drama Update: Parties Have Three Days Left to Supplement Their Arguments

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Renowned corporate lawyer James Filan shares an order from the U.S. magistrate judge crucial for Ripple case.

Both Ripple Labs Inc. and the U.S. Securities and Exchanges Commission (SEC) should provide additional arguments to supplement their positions in three days.

New legal briefs should be filled before Dec. 8, 2021

According to the scanned copy of a document shared by Attorney Filan, U.S. Magistrate Judge Sarah Netburn has issued an order that asks Ripple Labs Inc. and the U.S. SEC to “simultaneously” file letter briefs.

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The briefs should be filed before Dec. 8, 2021. New papers should supplement the parties’ arguments regarding Ripple’s latest motion to compel.

These supplemental briefings should be filed as Deliberative Process Privilege.

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Mr. Filan’s audience is certain that the obligation to provide new briefs was hotly anticipated and should be interpreted as a small win for Ripple.

“The law change slightly favors the SEC”

At the same time, attorney Jeremy Hogan shares that this extraordinary document (“law change”) favors the position of the Securities and Exchange Commission.

However, commentators should wait for the release of new briefs, Mr. Hogan concludes. He compared the court order to the behavior of a “daddy” who changes his child’s bedtime.

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As covered by U.Today recently, the SEC accuses Ripple Labs Inc. and its key officials, Brad Garlinghouse and Chris Larsen, of offering illegal securities to U.S. citizens in the form of XRP tokens.

This year-long legal battle highlighted many crucial questions regarding crypto regulation in the U.S., such as the status of crypto tokens and securities.

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Ripple Vs SEC

Inside the Ripple vs. SEC saga: Investigation reveals new details of personal interests at the SEC

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  • An investigation by FOX Business has revealed new tie-ups in the SEC vs. Ripple case, including Gensler’s huge role before he joined the SEC.
  • Andreessen Horowitz has also been identified as one of the key players protecting Ethereum and nudging the SEC on which way to regulate the space.

Eleven months ago, almost to the day, the U.S Securities and Exchange Commission (SEC) sued Ripple Labs for violating securities regulations with its sale of the XRP token. It also sued Brad Garlinghouse and Chris Larsen, the CEO and Chairman of the firm respectively, for facilitating this violation and benefitting personally from it. Since then, it’s been a lengthy legal battle that doesn’t seem to be ending soon.

But were the charges motivated by personal interests? Are there higher powers that are protecting the other projects, especially Ethereum? Was Ripple identified as the cheap target of the enforcement despite working extensively with the SEC to prove it had abided by the law? FOX Business believes so, and in its latest investigation, it made out links between Gary Gensler, Bill Hinman, Jay Clayton, Joe Lubin, Andreessen Horowitz and other powerful players that span back to over three years ago.

Jay Clayton

The biggest factor in the saga is Clayton, the former SEC head who in his last act filed the lawsuit against Ripple (literally hours before he left office). Clayton had been a Wall Street lawyer who, as a Republican, advocated for a free market. In fact, in his time at the SEC, most of the 65 new rules he passed were towards deregulation.

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Prior to his action against Ripple, Clayton had brought 87 actions against cryptocurrency businesses. Most of these were charges of selling unregistered securities, with the two standouts being Telegram and Kik. The former had conducted a $1.7 billion token sale, one of the largest ever and had to return $1.2 billion to investors and shut down.

The investigation unearthed that in January 2018, Clayton had asked Andreessen Horowitz, one of the world’s most renowned venture capital firms, to organize a summit of cryptocurrency leaders. The purpose of the summit was for the leaders to weigh in on regulations and make recommendations to the SEC.

Sources with knowledge of the matter revealed that Ethereum was vastly represented, with several members of the Ethereum Enterprise Alliance in attendance.

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One lawyer who attended the summit, Lowell Ness, later detailed that Clayton had told Andreessen to “round up the industry players to essentially lay out a very detailed written, foot-noted memo on what existing law says about utility tokens” and “give a proposal about where to go from here.”

Ripple executives, or their affiliates, were not invited to this summit.

This summit may sound like just another random event. But a year later, one of the lawyers present in this meeting was in a panel discussion in which he took partial credit for the now-very-famous Bill Hinman speech in 2018. This was the speech in which Hinman, who was a top SEC official, said Ether and BTC weren’t securities. He didn’t exempt any other cryptocurrency.

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The lawyer, Nancy Wojtas of Cooley LLP, stated in part that “director Hinman’s speech … most of what he says in there came out of the safe harbor as well as the meetings we had with him.”

Was it a coincidence that Hinman exempted Ethereum after holding a summit with top Ethereum advocates?

Gary Gensler

Just as important to the Ripple saga is Gary Gensler, the current SEC head and former CFTC chairman. Sources have revealed that even before joining the SEC, Gensler was just as involved in laying out regulations meant for the cryptocurrency industry.

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The first meeting was in March 2018. While all the details about the meeting have not been disclosed yet, sources say Gensler asked Clayton to take an even harsher stance on digital assets.

From the onset, Gensler had made up his mind that Bitcoin was not a security under the Howey test. Ethereum, on the other hand, wasn’t as clear-cut as BTC. Ripple’s XRP for him was an obvious security, even before the case against the company.

He told the New York Times in 2018:

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There is a strong case for both of them — but particularly Ripple — that they are noncompliant securities.

Days after the first meeting, Clayton stated in a town hall meeting in Atlanta,  “Most of what I’ve seen in the ICO space is a securities offering. It is raising money for a project where I give you my money, you give me some type of write-back that reflects a return on your project. That’s a securities offering.”

That first meeting isn’t the most controversial one, however. On December 21 last year, Gensler met Clayton once again. On his public schedule, Clayton detailed the sitdowns as “Meeting with Gary Gensler, president-elect Joe Biden’s transition team.”

The most striking thing about this meeting, in particular, was that it was one day before Clayton and the SEC charged Ripple with securities violations.

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SEC giving Ethereum and Bitcoin a “hall pass”

Ripple has accused the SEC of bias and picking the winners and losers in the cryptocurrency industry. Garlinghouse, the CEO, has openly accused Clayton, and now Gensler, of playing favorites and giving Bitcoin and Ether a hall pass.

And it’s not hard to see why the California company feels it’s being targeted, especially vis-a-vis Ethereum. The Ethereum founders held an ICO as well and Vitalik has been quite involved in developing the platform up to date, including championing for Ethereum 2.0.

Joe Lubin, the other Ethereum co-founder has been open about the project’s lobbying with regulators. He has, over the years, touted the close ties that the Ethereum family has kept with the SEC.

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For instance, he once talked about how “Bitcoin and Ethereum arrived before regulators were paying attention” and that “we were fortunate enough to frame our token as a utility token” while “others will be seen as securities.”

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Ripple

Inside the Ripple vs. SEC saga: Investigation reveals new details of personal interests at the SEC

Published

on

ripple-v-SEC
  • An investigation by FOX Business has revealed new tie-ups in the SEC vs. Ripple case, including Gensler’s huge role before he joined the SEC.
  • Andreessen Horowitz has also been identified as one of the key players protecting Ethereum and nudging the SEC on which way to regulate the space.

Eleven months ago, almost to the day, the U.S Securities and Exchange Commission (SEC) sued Ripple Labs for violating securities regulations with its sale of the XRP token. It also sued Brad Garlinghouse and Chris Larsen, the CEO and Chairman of the firm respectively, for facilitating this violation and benefitting personally from it. Since then, it’s been a lengthy legal battle that doesn’t seem to be ending soon.

But were the charges motivated by personal interests? Are there higher powers that are protecting the other projects, especially Ethereum? Was Ripple identified as the cheap target of the enforcement despite working extensively with the SEC to prove it had abided by the law? FOX Business believes so, and in its latest investigation, it made out links between Gary Gensler, Bill Hinman, Jay Clayton, Joe Lubin, Andreessen Horowitz and other powerful players that span back to over three years ago.

Jay Clayton

The biggest factor in the saga is Clayton, the former SEC head who in his last act filed the lawsuit against Ripple (literally hours before he left office). Clayton had been a Wall Street lawyer who, as a Republican, advocated for a free market. In fact, in his time at the SEC, most of the 65 new rules he passed were towards deregulation.

Advertisement

Prior to his action against Ripple, Clayton had brought 87 actions against cryptocurrency businesses. Most of these were charges of selling unregistered securities, with the two standouts being Telegram and Kik. The former had conducted a $1.7 billion token sale, one of the largest ever and had to return $1.2 billion to investors and shut down.

The investigation unearthed that in January 2018, Clayton had asked Andreessen Horowitz, one of the world’s most renowned venture capital firms, to organize a summit of cryptocurrency leaders. The purpose of the summit was for the leaders to weigh in on regulations and make recommendations to the SEC.

Sources with knowledge of the matter revealed that Ethereum was vastly represented, with several members of the Ethereum Enterprise Alliance in attendance.

Advertisement

One lawyer who attended the summit, Lowell Ness, later detailed that Clayton had told Andreessen to “round up the industry players to essentially lay out a very detailed written, foot-noted memo on what existing law says about utility tokens” and “give a proposal about where to go from here.”

Ripple executives, or their affiliates, were not invited to this summit.

This summit may sound like just another random event. But a year later, one of the lawyers present in this meeting was in a panel discussion in which he took partial credit for the now-very-famous Bill Hinman speech in 2018. This was the speech in which Hinman, who was a top SEC official, said Ether and BTC weren’t securities. He didn’t exempt any other cryptocurrency.

Advertisement

The lawyer, Nancy Wojtas of Cooley LLP, stated in part that “director Hinman’s speech … most of what he says in there came out of the safe harbor as well as the meetings we had with him.”

Was it a coincidence that Hinman exempted Ethereum after holding a summit with top Ethereum advocates?

Gary Gensler

Just as important to the Ripple saga is Gary Gensler, the current SEC head and former CFTC chairman. Sources have revealed that even before joining the SEC, Gensler was just as involved in laying out regulations meant for the cryptocurrency industry.

Advertisement

The first meeting was in March 2018. While all the details about the meeting have not been disclosed yet, sources say Gensler asked Clayton to take an even harsher stance on digital assets.

From the onset, Gensler had made up his mind that Bitcoin was not a security under the Howey test. Ethereum, on the other hand, wasn’t as clear-cut as BTC. Ripple’s XRP for him was an obvious security, even before the case against the company.

He told the New York Times in 2018:

Advertisement

There is a strong case for both of them — but particularly Ripple — that they are noncompliant securities.

Days after the first meeting, Clayton stated in a town hall meeting in Atlanta,  “Most of what I’ve seen in the ICO space is a securities offering. It is raising money for a project where I give you my money, you give me some type of write-back that reflects a return on your project. That’s a securities offering.”

That first meeting isn’t the most controversial one, however. On December 21 last year, Gensler met Clayton once again. On his public schedule, Clayton detailed the sitdowns as “Meeting with Gary Gensler, president-elect Joe Biden’s transition team.”

Advertisement

The most striking thing about this meeting, in particular, was that it was one day before Clayton and the SEC charged Ripple with securities violations.

SEC giving Ethereum and Bitcoin a “hall pass”

Ripple has accused the SEC of bias and picking the winners and losers in the cryptocurrency industry. Garlinghouse, the CEO, has openly accused Clayton, and now Gensler, of playing favorites and giving Bitcoin and Ether a hall pass.

And it’s not hard to see why the California company feels it’s being targeted, especially vis-a-vis Ethereum. The Ethereum founders held an ICO as well and Vitalik has been quite involved in developing the platform up to date, including championing for Ethereum 2.0.

Advertisement

Joe Lubin, the other Ethereum co-founder has been open about the project’s lobbying with regulators. He has, over the years, touted the close ties that the Ethereum family has kept with the SEC.

For instance, he once talked about how “Bitcoin and Ethereum arrived before regulators were paying attention” and that “we were fortunate enough to frame our token as a utility token” while “others will be seen as securities.”

News Source

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Continue Reading