Ripple hints SEC deemed XRP not a security prior to lawsuit

Rick Steves

The SEC’s internal documents could destroy the case against Ripple over XRP.

Equity research in Japan under FSA’s scrutiny

As we approach the final chapters of the SEC v. Ripple lawsuit, the exchanges between parties have become harsher and include more details than before.

Recent remarks by Ripple counsel have led legal experts following the case to conclude there is really something compromising for the SEC inside the agency’s internal documents that Judge Netburn has ordered to be produced.

Attorney Jeremy Hogan, partner at the Hogan & Hogan law firm, called it the “smoking gun” in a video where he explained the latest updates in the case.

SEC’s internal documents could destroy case against Ripple

Reminding that the SEC has gone to extraordinary lengths in order to keep from turning them over, including asking Judge Netburn to reconsider her order and indicating they intend to appeal Judge Netburn’s ruling to Judge Torres if she doesn’t change her mind, attorney Hogan considers the SEC’s legal positions on this to be quite abnormal.

In a previous video, he shared his suspicions that something was off: “There must be something really bad for the SEC. Something that really just destroys the SEC’s case. It must be really bad to justify the legal gymnastics the SEC has been playing on this issue.”

“Spot on the money”, he now says about his suspicion, which may turn out to be that the SEC has previously analyzed XRP and concluded it was not a security.

In the plaintiff’s latest attempt to keep its internal documents away from the lawsuit, the SEC took a part of the Judge’s ruling – “in order for the individual defendants to be found guilty, they must have knowledge of wrongdoing” – and applied it to argue the internal documents related to the Hinman’s speech are not relevant.

“In light of Judge Torres’ Order, it is clear that the SEC’s internal documents – reflecting it’s staff’s thinking about XRP, Bitcoin, Ether, or any other digital asset – have no relevance…”, the SEC stated in the motion.

Ripple, in its turn, made quite the reveal: that Hinman “potentially” analyzed XRP and concluded it was not a security.

“The SEC should not be permitted to argue to the fact finder that Mr. Garlinghouse and Mr. Larsen were reckless not to recognize that XRP purchasers saw XRP as an investment in a common enterprise while conceilling potentially that the SEC’s own director of corporation finance had analyzed a substantially similar asset (and maybe even XRP itself) and concluded that it was not.”

Attorney Hogan admitted the possibility of a bluff, but that it is more likely that it isn’t.

If Ripple gets what it wants, XRP lawsuit is over by the summer

As to progress in the SEC v. Ripple case, the defendants want to move forward quickly with summary judgment on the main issues in the case: whether XRP is a security and on the fair notice defense.

The SEC, however, is trying to hold them back with more delays by keeping discovery alive. This behavior, which Ripple calls “gamesmanship”, has fueled the harshest language to date. 

“Remember all the fireworks and frustration are not stemming from the legal issues in the case. The conflict is that Ripple is trying to move the case forward quickly and the SEC, for whatever reason, is trying to delay, delay, delay”, attorney Hogan explained.

“If Ripple can get those issues to summary judgment and win on either one of those issues, the case against Garlinghouse and Larsen goes away. So, Ripple is saying that since discovery involving those two issues is concluded, we can move forward with the Ripple case on one track and, in the meantime, continue the discovery in other issues related with the individual defendants on another track.

“The SEC, on the other hand, is trying to delay the case by saying that the Ripple case and the individual defendants case is only one case. And Ripple shouldn’t be allowed to move forward until all discovery is concluded in regards to the individual defendants.

“If she agrees with Ripple, they suggested opening briefs on May 22 of this year, which would put us on schedule for a decision in late summer as expected. If the judge agrees with the SEC, a summer 2022 conclusion to this case is probably too optimistic”, he concluded.

The Judge has recently ordered both parties to agree on a briefing schedule for summary judgment.

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