Ripple CTO “chokes on Diet Coke” as SEC desperately tries to overturn court ruling

Rick Steves

The SEC said Bill Hinman’s speech was his personal opinion. He signed an affidavit stating just that. The court accepted that as the truth, which makes documents pertaining to that speech unprivileged information. The SEC, however, seems to be doing a full 180º.

The Securities and Exchange Commission has asked Judge Analisa Torres to wait until February 17, 2022, as the plaintiff prepares a motion for partial reconsideration of the Deliberative Process Privilege (DPP) ruling ordered by Judge Sarah Netburn.

The SEC wants to file a 20-page brief and submit more documents for the in camera review in support of the motion to reconsider the court’s ruling of one single aspect of the order: the drafts and emails in connection with ex-SEC Director Bill Hinman speech of June 14, 2018.

“The SEC is desperately trying not to have to turn over the documents to Ripple” – James K. Filan

The court granted Ripple’s motion to compel the SEC to deliver those documents based on the uniqueness and precedent-setting nature of the case and massive public interest.

“The SEC had two different routes to take in response to Judge Netburn’s DPP ruling. First, it could request that Judge Netburn
reconsider her ruling, or, second, it could have filed objections to Judge Netburn’s ruling directly with Judge Torres, which is basically an appeal. But both the motion for reconsideration and the objections have to be filed within 14 days of Judge Netburn’s original ruling”, attorney James K. Filan explained on Twitter.

“So what the SEC is doing is asking Judge Torres to wait until 21 days after Judge Netburn rules on the motion for reconsideration before the SEC must file its objections directly with Judge Torres. The SEC is desperately trying not to have to turn over the documents to Ripple”.

“I choked on my Diet Coke as I read this”

Also commenting on the SEC’s unexpected move was David Schwartz, Chief Technology Officer at Ripple Labs. “I choked on my Diet Coke as I read this”, sharing a photo of one specific paragraph.

“The SEC respectfully submits that these additional documents clarify the truly deliberative nature of the discussions surrounding the Speech across the SEC, and show that the Speech was not “merely peripheral to actual policy formulation”, but was in fact an “essential link” in the SEC’s deliberative process with respect to Ether” and other digital assets. The SEC  therefore seeks leave to submit for in camera review the entire set of the 66 documents…”

The whole SEC v. Ripple lawsuit has been baffling executives, law experts, investors, lawmakers, and some regulators ever since it started. This move opens a new chapter as the SEC seems to be looking to have it both ways.

A few months ago, the SEC’s attorneys argued Bill Hinman’s 2018 speech was merely his personal opinion in order to protect itself from Ripple’s attempts to make the fair notice defense stick. Judge Sarah Netburn accepted the agency’s statement as true and in her latest ruling, the court considered the drafts and emails regarding his speech as not privileged, thus ordering the SEC to deliver those to Ripple’s defense.

Now, the SEC is trying to argue that the speech was not “merely peripheral to actual policy formulation”, but was in fact an “essential link” in the SEC’s deliberative process with respect to Ether and other digital assets.

An epic 180º turn. We’re getting closer to the anniversary of the first time the court ordered the SEC to hand over those documents.

“Plainly not appropriate”, says Ripple

Ripple, as expected, filed against the SEC’s request to extend by three weeks the time to file a motion for reconsideration of Judge Netburn’s DPP ruling.

The defendants complained about the time lost since the SEC first refused to hand over said documents, almost a year ago.

“Defendants are entitled to review these documents to prepare their defenses to the SEC’s claims. Any further delay to allow the SEC to present new or additional evidence or to raise new arguments that are plainly not appropriate on a motion of reconsideration would only prejudice Defendants.

Given the SEC’s arguments, Ripple replied that a motion for reconsideration may not be used to advance new facts, issues or arguments not previously presented to the Court.

In the meantime, XRP Holders’ attorney John Deaton has already announced he will file a FOIA request to get his hands on Hinman’s emails and drafts as well.


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