Ripple Labs has won a victory over the Securities and Exchange Commission in its ongoing securities fraud action. The judge presiding over the case refused the SEC’s demand for review of some documents that may be irrelevant to the prosecution.
Ripple Labs has scored a blow against the Securities and Exchange Commission’s (SEC) case following a judgement by the presiding judge that one Ripple community lawyer describes as “a very significant victory for Ripple.”
The SEC charged Ripple and executives Brad Garlinghouse and Christian Larsen with selling unregistered securities in 2020.
Presiding Judge Sarah Netburn refused the SEC’s request to reconsider protecting records related to a June 2018 lecture delivered by Ripple’s then-director Willian Hinman under the privilege. Hinman stated during the speech that Bitcoin (BTC) and Ethereum (ETH) are not securities.
Previously, the SEC did not object to such documents being exempt from deliberative process privilege (DPP) protection since they appeared to concern just Hinman’s personal views and not Ripple policies.
The DPP withholds some documents from disclosure by the government in order to conduct a confidential review of existing policy based on the papers’ contents.
The SEC later shifted its position, arguing that the speech reflected Ripple’s policy, not Hinman’s personal views, and thus should be protected.
Judge Netburn stated that the SEC should avoid contradicting itself by attempting to rebut its allegations. She wrote in her decision:
“While the SEC wishes to have it both ways, the Speech was either intended to reflect or not intended to reflect agency policy. The SEC cannot now reject its own position after insisting that it reflected Hinman’s personal opinions.”
James K. Filan, a Ripple community defence attorney with a substantial case file of financial and SEC issues, summarised the important aspects of Judge Netburn’s refusal to reconsider today:
This is a very big win for Ripple.
— James K. Filan 🇺🇸🇮🇪90k+ (beware of imposters) (@FilanLaw) April 11, 2022
Additionally, another Ripple community lawyer and founder of Crypto-Law.us tweeted today to his 191,000 followers that “The SEC is now in a hurt locker” as a result of Judge Netburn’s order.
This is not just a win for @Ripple and #XRPHolders, but for the judicial system. After the March 2021 hearing, I said we were lucky to get Judge Netburn. Some of you disagree, but I still believe it. The SEC is now officially in a hurt locker. https://t.co/MuSC8ORrd2
— John E Deaton (@JohnEDeaton1) April 11, 2022
Despite this obviously significant verdict, the lawsuit is far from over, and the SEC now has two weeks to appeal.
Much of the cryptocurrency sector is focused on the outcome of this case, as it could determine the future of SEC complaints against crypto businesses for unregistered securities sales.
A Ripple victory could signal a reversal in the SEC’s aggressive action against the cryptocurrency industry. However, if the SEC prevails, the floodgates could widen, creating a cottage industry for crypto-savvy lawyers.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.