Ripple won a key procedural victory in its battle with the Securities and Exchange Commission (SEC)
Ripple won a ruling that will force the U.S. Securities and Exchange Commission (SEC) to disclose emails concerning a speech in which a former official concluded Ethereum is not a security.
The judge said Ripple can access emails about SEC Ethereum speech
A judge’s ruling ordered the SEC to turn over an email containing a draft statement by former director William Hinman on whether Ethereum is considered a security. The lawyer who closely follows the lawsuit between Ripple and the SEC, James K. Filan, stated:
Entry 1express the notetakers’ own thinking or reflect deliberations or communications among SEC staff, the SEC may seek leave for limited
redactions. Defendants’ motion is otherwise DENIED.https://t.co/XALwb3CXmQ
— James K. Filan ???? (@FilanLaw) January 13, 2022
Ripple secured another victory on Thursday when a federal judge ruled that the fintech startup could access emails related to a speech in which a former SEC official claimed Ethereum is not a security. This ruling is significant as it could help Ripple make a strong case that XRP is not a security.
The SEC has been ordered to hand over the emails as an ongoing case with San Francisco-based payments firm Ripple. The regulatory agency will need to provide Ripple with emails containing drafts of the watershed speech delivered by the former director of the SEC’s Division of Corporation Finance in 2018, where he concluded that Ethereum was not a security.
The SEC’s legal team has long maintained that these emails and multiple other documents are subject to “privilege,” therefore protected from discovery. The Magistrate Judge presiding over the case, Sarah Netburn, indeed concurred with the SEC regarding a couple of these documents but denied the agency’s argument for others.
Regarding the emails about the former SEC official’s speech, Judge Netburn ruled that they were not protected by privilege because they contained his personal opinion and not the regulator’s.
“The personal views of agency employees are not protected by the privilege unless they bear on ‘the formulation or exercise of policy-oriented judgment. Accordingly, emails concerning the speech or draft versions are neither predecisional nor deliberative agency documents entitled to protection,” the lengthy ruling said.
The judge also pointed out that the SEC will not have to waive notes from any meetings held between Ripple and SEC employees, nor documents on communications between the agency’s crypto maestro Valerie Szczepanik and an office of the Treasury department.
Hinman’s speech was pivotal to the SEC lawsuit against Ripple, in which the agency disputes the crypto company and its board members Brad Garlinghouse and Chris Larsen knew the assets. Their XRP digitally was security but sold it anyway to the public without the need for registration. The SEC sued Ripple back in December 2020 for allegedly raising more than $1.3 billion from the sale of unregistered securities.
While the judge’s latest ruling is a significant victory over the SEC, it has nothing to do with the crux of the case, which depends on whether the token is a security. Ripple requested documents showing how Hinman concluded that Ethereum is not a security in its defense. The company hopes such documents will help remove the SEC’s allegations surrounding XRP’s regulatory status. In other words, Ripple’s lawyers are fighting to figure out why Ethereum is subject to different standards.
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