Ripple is far from stuck in the XRP lawsuit. The blockchain firm has announced partnerships in CBDCs and payments, its digital asset continues to be listed on high-profile exchanges, and the lawsuit is rippling through.
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Bhutan, the small Asian country, is looking to pilot its central bank digital currency (CBDC) on top of the CBDC Private Ledger technology of Ripple.
“It can’t point to an investment contract and instead is going to rely on statements and other murky half-promises made by Ripple”, said attorney Jeremy Hogan.
“If the SEC truly is going to try and make an argument that the difference between XRP and Ether is that the Ripple ledger is not fully built out – that is a major shift in SEC strategy and major admission of a defeat for the SEC”.
All in all, the ruling can still be perceived as a win for Ripple: the SEC refused to prove its internal policy against holding XRP, which naturally raises questions. The judge denied the motion but ordered the SEC to produce said documents.
Ripple, the global payments platform that created the digital asset XRP, is reportedly looking to launch a market-making platform for XRP though a spokesperson of the company who has denied any such plans for now.
“The SEC refuses to answer […] because, Defendants suspect, a truthful, sworn answer would reveal that no contractual provisions actually bear the weight the SEC intends to place on them.
“Defendants seek the documents to put on a (wholly improper) defense that “the SEC staff…questioned whether XRP and other digital assets were securities” and therefore that Defendants are not liable.”
Richard Bell was Senior Director at Ripple from 2018 to 2021 and Jeremy Light was Vice President of Strategic Accounts at Ripple from 2018 to 2020.
“This is it! This is what the SEC is going to prove in Court and so let’s take a look at its answer under oath”, said Mr. Hogan.
With Coinbase on the verge of a lawsuit, regulatory clarity is once again the most pressing issue within the digital asset space even despite the extensive criticism against the SEC’s regulation-by-enforcement practice.
The defendants claimed such demand would likely take months to complete and come at a very significant cost. The SEC replied that the time-consuming process “should present no issue in this case” since there is “no realistic prospect that the parties will fully resolve this case for several months, if not longer”.
“Well, I’ll say it: I swear Judge Netburn is following some of the XRP people on Twitter or maybe even on Youtube. I didn’t think so before but now… I see you Judge Netburn”.
“Evasive responses “must be treated as a failure to disclose, answer, or respond.”
“Let’s max out the conference call but give them zero to complain about”.
“Ripple never informed the SEC that Ripple routinely recorded staff meetings until a key former Ripple employee testified to that in her deposition earlier this month”
“The problem with a settlement between now and November 12 is that the parties won’t know how strong each side’s position is until after discovery closes”.
New Motion to Compel aims to expose the SEC’s policies governing digital assets and their employees’ trading of XRP, ETH, and BTC. It may support Ripple’s fair notice defense.
In 2019, SEC’s Amy Starr and Coinbase’s Dorothy DeWitt made comments that are now considered critical evidence for Ripple’s Fair Notice defense and whether XRP is a security or not.