The SEC just got a slap in the face, with Judge Sarah Netburn’s refusal to give it access to Ripple’s legal disclosures (XRP).
SEC vs. Ripple: between facts and beliefs
A May 30, 2021 memo indicates that US District Judge Sarah Netburn has denied the SEC’s request for access to Ripple Labs’ legal communications. On May 7, 2021, the SEC had sought an order to access “all communications constituting, conveying, or discussing any legal advice that Ripple sought or received regarding whether its offerings and sales of XRP were or would be subject to the federal securities laws.”
Judge Netburn’s reasons for her decision include a claim of attorney-client privilege, and the confidentiality of their correspondence and exchanges.
For Hogan & Hogan law firm partner Jeremy Hogan, Judge Netburn’s decision is “very significant.” The SEC will not be able to use “Ripple’s subjective beliefs about XRP” to combat the defense’s case. Judge Netburn did make clear the limited scope of her decision, however, as the court is not yet taking a position on the substantive issue between Ripple and the U.S. financial regulator.
Closed doors for the SEC
The SEC had filed a complaint against Ripple in December 2020. The US regulator accuses Ripple of selling unregistered financial securities that allowed it to raise about $1.3 billion. This dispute is one of the biggest and most publicized in the cryptosphere.
The SEC had already tried unsuccessfully to strike a blow to the personal finances of Ripple CEO Brad Garlinghouse and his partner Chris Larsen. The firm, meanwhile, had been able to access internal SEC communications to find out whether the regulator was already monitoring XRP before the lawsuits began, and whether it had any chance of XRP being considered similar to Bitcoin (BTC) or Ether (ETH).
The SEC had recently won a legal battle against Ripple, a victory that allows it to have the support of foreign regulators, opening the possibilities of an international investigation against Brad Garlinghouse’s company. While Ripple is still mired in its legal troubles with the SEC, the XRP whales don’t seem to care and continue to proliferate. Judge Netburn’s decision will slightly dampen the SEC footsteps on the XRP markets.
