Ripple Labs has achieved a victory in its case against the Securities and Exchange Commission (SEC); the judge presiding over the case handed down a sentence that a lawyer from the Ripple community calls “a very big victory for Ripple”.
The SEC filed a lawsuit in 2020 against Ripple and executives Brad Garlinghouse and Christian Larsen for selling unregistered securities..
Presiding Judge Sarah Netburn denied the SEC’s request to reconsider the protection of privileged documents related to a June 2018 speech by then-SEC Director William Hinman.. In the speech, Hinman said that Bitcoin (BTC) and Ether (ETH) are not securities.
The SEC did not previously object to those documents falling outside the protection of the deliberative process privilege (DPP).as he suggested that they were only referring to Hinman’s personal views and not to SEC policies.
The DPP exempts some case documents from government disclosure so that it can confidentially review existing policy based on the materials in the documents.
The SEC subsequently changed tack, arguing that the speech reflected Ripple’s policies and not Hinman’s personal views, so he needed to protect himself..
Judge Netburn said the SEC should not contradict itself in trying to change its claims.. In his decision, he wrote:
“The SEC purports to have both, but the speech either intended to reflect agency policy or it didn’t. After insisting that it reflected Hinman’s personal views, the SEC cannot now reject its own position.”
Summarizing the critical aspects of Judge Netburn’s refusal to reconsider, a Ripple community defense attorney with an extensive SEC and financial case file, James K. Filan, tweeted today:
This is a very big win for Ripple.
— James K. Filan 90k+ (beware of imposters) (@FilanLaw) April 11, 2022
This is a huge victory for Ripple.
Another lawyer from the Ripple community and founder of CryptoLaw, John E Deaton, tweeted today to his 191,000 followers that “The SEC is now at a disadvantage” following Judge Netburn’s ruling.
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
This is not just a victory for @Ripple and XRP holders, but for the court system. After the March 2021 hearing, I said we were lucky to get Judge Netburn. Some of you disagree, but I still think so. The SEC is now officially at a disadvantage.
Despite this seemingly important ruling, the case is not yet over.and the SEC now has two weeks to appeal the decision.
Much of the cryptocurrency industry is attentive to the proceedings of this caseas its outcome could dictate the future of SEC filings against cryptocurrencies for unregistered security sales.
A Ripple victory could cause the SEC to back down from its aggressive litigation against the cryptocurrency industry.. However, if the SEC wins, the floodgates could open and lawyers familiar with crypto will have a cottage industry prepared for them.
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