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Even if the SEC discloses aggregate data of XRP holdings as Ripple requested, it is not a privacy violation

As AZCoin News reported, Ripple asked the Securities and Exchanges Commission (SEC) to reveal XRP holdings information. However, to promote the privacy of personnel, the SEC asked the court to refuse the defendant’s offer. And perhaps the SEC won’t disclose aggregate data of any holdings and trading.

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SEC won’t disclose Bitcoin, ETH, or XRP Holdings as Ripple requested

“Defendants’ request falls well below the ‘low bar of relevance’ the Court considered when it ordered the SEC to produce Ethics Counsel’s guidance on digital assets and is an unjustified intrusion into the private financial affairs of SEC employees, even on an aggregate basis,” Pascale Guerrier, Trial Attorney at SEC in the Division of Enforcement said in a court filing.

Ripple and its executives have put forth the defense of fair notice, which necessarily turns on whether they knew or should have known that XRP is or was security. The argument thus is simple: if SEC employees themselves did not realize or behaved in a way that suggested they did not know XRP was a security, how on earth is the court or the public to expect anyone else to learn.

However, the SEC says employee trading data is collected for ethical compliance purposes. That ethical clearing has nothing to do with whether the asset is a security or not, but merely a conflict of interest. Well-known securities are often cleared for trading, SEC said.

Where it concerns crypto itself, XRP is not well-known security, but on trial regarding whether it is security with one defense being fair notice, the lack of which turns into law by enforcement that creates a disbalance of information as the enforcer, of course, knows of their actions before taking them, and as such can financially profit from market movements based on their action, with that being a prominent and apparent conflict of interest due to there being two stages: one where there is no determination on whether an asset is a security, and two once such decision has been made.

“The SEC has also provided additional information that Bitcoin, Ether, and XRP did not appear on the SEC’s Prohibited Holdings list and that BTC and ETH never appeared on the Watch List and that XRP first appeared on it on April 13, 2018,” Guerrier stated.

The prohibited holdings list is for entities SEC directly oversees, like brokers, which is not applicable in this case. The Watch List is for assets that are under pre-investigation.

“An employee may not be permitted to engage in trading in securities related to that entity when it is ‘under investigation,” SEC said.

Securities is a particular term that we all have come to know in some detail. A bitcoin ETN or ETF, for example, is a security, but BTC is not. If it were on this Watch List, employees would not be prohibited from trading BTC directly.

And now the question that’s stuck here is, was there any trade-in XRP at SEC after April 13, 2018? The answer to that question can be crucial to the entire case; disclosing this data is not a low bar of relevance, but most relevant as if there was a trade, it would show SEC by its own rules did not consider it a security.

Was there any trade-in XRP at SEC before April 13, 2018? If there was, then why were SEC employees trading illegal security as SEC calls XRP and were cleared to do so by the ethics committee as holding illegal security by someone that is meant to enforce such matters is an apparent conflict of interest, indicating maybe they did not consider it to be a security? If there were trades before and not after, then doesn’t that go a great deal towards showing there was no fair notice that XRP is a security?

But it looks like the SEC is just making excuses because they wouldn’t violate privacy even if they did. After all, the names of employees are not revealed. It’s just a total number like x number of employees who bought or sold XRP or ETH.

It is also very, very much in the public interest and Ripple communities to know whether this law-making by enforcement – with this being the first case of note that finally allows the rightful body to interpret what is now ancient law as so far other cases have been settled, leaving SEC as judge, jury, and executioner for three years now – whether this way of behavior is to the direct financial benefit of SEC employees.

The SEC is a self-interested organization that wants to increase its budget and credibility by expanding its jurisdiction with everything security for them because that means more money for them.

However, the judicial authority needs to consider all issues and, most importantly, the public interest. It is in everyone’s interest to know if the SEC has traded or not traded cryptocurrencies while bringing it decisions that significantly affect the crypto market and for Ripple.

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