Ripple Labs has struck a blow against the Securities and Exchange Commission’s (SEC) case after the presiding judge made a ruling that one Ripple community lawyer calls “a very big win for Ripple.”
The SEC filed suit 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 shielding documents under privilege related to a June 2018 speech made by SEC’s then-director William Hinman. In the speech, Hinman said Bitcoin (BTC) and Ether (ETH) are not securities.
The SEC previously did not object to those documents falling outside deliberative process privilege (DPP) protection, as it suggested they only concerned Hinman’s personal views and not SEC policies.
The DPP exempts some documents in a case from being disclosed by the government so it can confidentially review existing policy based on the materials of the documents.
The SEC subsequently changed tack to argue the speech reflected Ripple’s policies rather than Hinman’s personal views and should be shielded.
Judge Netburn said the SEC should not contradict itself in trying to flip-flop on its assertions. 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.”
In summing up the critical aspects of Judge Netburn’s rejection to reconsider, a Ripple community defense lawyer with an extensive case file of financial and SEC cases James K. Filan tweeted today:
This is a very big win for Ripple.— James K. Filan 90k+ (beware of imposters) (@FilanLaw) April 11, 2022
Another Ripple community lawyer and founder of CryptoLaw also tweeted today to his 191,000 followers that “The SEC is now in a hurt locker” 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
Despite this seemingly important ruling, the case isn’t winding up yet, and the SEC now has two weeks to appeal the decision.
Much of the crypto industry is fixated on the proceedings of this case as its outcome could spell out the future of SEC filings against crypto companies for sales of unregistered securities.
A Ripple victory could see the SEC pull back from its aggressive litigations against the crypto industry. However, if the SEC wins, the floodgates could open and lawyers familiar with crypto will have a cottage industry ready-made for them.