Next up on SEC v. Ripple: A back and forth on discovery conference

Rick Steves

The lawsuit has a few more events scheduled this month, including Ripple Labs filing today its response to the SEC’s motion for a discovery conference concerning privileged materials. On May 28, the regulator will reply to that.

The SEC v. Ripple Labs is currently at the center stage of the regulatory clarity debate for the cryptocurrency industry. The ecosystem is under lightning fast evolution and authorities are unable to keep up with the changes without risking hampering its development.

On Thursday, U.S. Federal Reserve chief Jerome Powell said cryptos pose risks to financial stability and called for greater regulation as the Treasury Department warned that the wealthy may be using the unregulated sector to avoid tax.

As the technology advanced “so must our attention to the appropriate regulatory and oversight framework. This includes paying attention to private-sector payments innovators who are currently not within the traditional regulatory arrangements applied to banks, investment firms, and other financial intermediaries”, said Mr. Powell.

Goldman Sachs has recently produced a research paper authored by Mathew McDermott, global head of digital assets, stating that Bitcoin is now considered an investable asset.

The research paper shows concern for the “inconsistent regulatory actions around the globe that impede the further development of the crypto space or the ability of more regulated entities to engage within it”, but shows hope as the tone seems to have “turned more constructive”.

The SEC v. Ripple lawsuit is considered by many as an example of an unwelcomed outcome of what is seen as inconsistent regulatory action. One of Ripple’s key arguments is the “lack of due process and fair notice” affirmative defense.

It is possible that this lawsuit will fail to clarify the nature of XRP as it seems that Ripple Labs may be pushing for a Summary Judgement on its lack of due process and fair notice affirmative defense. A potential outcome is that no one could be sued after that.

The lawsuit has a few more events scheduled this month, including Ripple Labs filing today its response to the SEC’s motion for a discovery conference concerning privileged materials. On May 28, the regulator will reply to that.

On May 27, the SEC will reply to Ripple’s opposition brief to the SEC’s motion to strike Ripple’s Lack of Due Process and Fair Notice affirmative defense.

On that issue, the SEC argued that “no federal court has accepted a defendant’s argument that the term fails to provide the constitutionally required notice; indeed, in the realm of offers or sales of digital assets, at least two district courts in this Circuit have rejected that argument”.

In its reply, Ripple pointed to key omissions and misrepresentations of the Judge’s remarks contained in the SEC’s motion.

The court is still to decide, among other things, on the SEC’s motion to compel Ripple to turn over documents regarding legal advice Ripple received about whether sales or offers of XRP were securities”. The lawsuit agenda can be found here.

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