Ripple Labs hit the U.S. Securities and Exchange Commission (SEC) case following the trial judge's ruling, which a Ripple community lawyer called "a very big victory for Ripple."
The SEC filed a lawsuit in 2020 against Ripple and its executives, Brad Garlinghouse and Christian Larsen, alleging it sold unregistered securities.
Presiding Judge Sarah Netburn rejected the SEC's request to reconsider the privilege to block documents related to a June 2018 speech by then-Ripple director William Hinman. In his presentation, Hinman stated that Bitcoin (BTC) and Ethereum (ETH) are not securities.
The SEC previously did not object to documents that fall outside the protection of the deliberative process privilege (DPP), as it indicated they dealt only with Hinman’s personal views, not Ripple’s strategy.
The DPP exempts the government from disclosing certain documents in the case, so it can secretly review existing policy based on documented material.
The SEC subsequently reversed course, arguing that the speech reflected Ripple's strategy, rather than Hinman's personal views, and should be blocked.
Judge Netburn said the SEC should not have contradicted itself in trying to overturn its assertion. In her decision, she wrote:
“The SEC tried to have the best of both worlds, but the speech was either intended to reflect agency strategy or it wasn’t. The SEC maintained that it reflected Hinman’s personal views, which cannot now be denied.”
Summarizing key aspects of Judge Netburn’s refusal to reconsider, Ripple community advocate James K. Filan tweeted today:
Another Ripple community attorney and the founder of Crypto-Law.us also tweeted to his 191,000 followers today that the “SEC is in the emergency room right now” following Judge Netburn’s ruling.
Despite this seemingly important ruling, the case is not closed, and the SEC now has two weeks to appeal the decision.
While the ruling appears to be significant, the case is not over and the SEC now has two weeks to appeal the ruling.
Many in the crypto industry are watching the case because its outcome could herald the future of SEC filings against crypto companies selling unregistered securities.
A victory for Ripple could see the SEC withdraw from an aggressive lawsuit against the cryptocurrency industry. However, if the SEC wins, the floodgates could open, and lawyers familiar with cryptocurrencies will have a ready-made industry ready for them.
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