Ripple Labs was successful in its ongoing securities fraud case against the SEC. The judge in the case denied the SEC’s request to review documents that may or may not be relevant to the prosecution.
Ripple Labs has dealt a blow to the Securities and Exchange Commission’s (SEC) case after the presiding judge issued a ruling that one Ripple community lawyer describes as “a very big win for Ripple.” In 2020, the SEC charged Ripple and executives Brad Garlinghouse and Christian Larsen with selling unregistered securities.
SEC Contradicts Itself
Presiding Judge Sarah Netburn rejected the SEC’s request to reconsider safeguarding documents under privilege related to a speech given by Ripple’s then-director Willian Hinman in June 2018. Hinman stated in his speech that Bitcoin (BTC) and Ethereum (ETH) are not securities.
The SEC previously did not object to those documents falling outside of the deliberative process privilege (DPP) protection. At the time, they believed it appeared to be about Hinman’s personal views rather than Ripple’s practices. The DPP exempts some documents from government disclosure to discreetly examine existing policy based on the papers’ contents. The SEC later shifted its position, claiming that the speech reflected Ripple’s policy rather than Hinman’s personal opinions and thus should be protected.
Judge Netburn stated that the SEC should not contradict itself by attempting to backtrack on its claims. In her decision, she wrote: “The SEC seeks to have it both ways, but the Speech was either intended to reflect agency policy or it was not. Having insisted that it reflected Hinman’s personal views, the SEC cannot now reject its own position.”
Defense Lawyers Back Judge Netburn
Following Judge Netburn’s ruling, a Ripple community defense lawyer with a substantial case file of financial and SEC matters, James K. Filan, tweeted: ” This is a very big win for Ripple.” Another Ripple community lawyer and founder of Crypto-Law.us tweeted to his 191,000 followers: “The SEC is now in a hurt locker.”
Despite this seemingly significant decision, the matter is still ongoing, and the SEC now has two weeks to file an appeal.
The outcome of this case could determine the future of SEC complaints against crypto businesses for sales of unregistered securities, which has piqued the interest of many in the crypto community.
If Ripple wins, the SEC may reconsider its aggressive legal actions against the crypto industry. If the SEC prevails, the floodgates could open, and lawyers who are familiar with crypto will have a ready-made cottage sector.