Ripple lawsuit: SEC finds way to kill DPP issue leveraging Judge’s statements

Rick Steves

“In light of Judge Torres’ Order, it is clear that the SEC’s internal documents reflecting its staff’s thinking about XRP, Bitcoin, Ether, or any other digital asset – have no relevance to the Individual Defendants’ scienter”, the SEC argued.

The Securities and Exchange Commission has filed a letter claiming that the court’s recent decision to deny Ripple executives’ motion to dismiss has made the DPP documents under dispute irrelevant to the case.

The letter supplements the SEC’s motion for partial reconsideration and clarification of the DPP ruling, which ordered the production of drafts of former Director Hinman’s speech and related internal communications.

SEC argues Court made DPP documents irrelevant

“For the reasons set forth below, the Order answers any question as to whether the SEC’s internal documents are relevant to the Individual Defendants’ scienter. They are not. Accordingly, the Order merits resolution of the two pending motions in the SEC’s favor, regardless of whether the DPP applies to the documents (as it does, for the reasons described in the SEC’s briefs on these motions).”

The SEC then argued that, in Judge Torres’ ruling on the motion to dismiss, the court was clear that the SEC’s internal documents have no relevance.

“In denying Individual Defendants’ motion to dismiss the aiding and abetting claims, Judge Torres expressly rejected Individual Defendants’ proposed scienter standard and resolved this dispute in the SEC’s favor. First, Judge Torres held that the SEC does not need to prove that Individual Defendants knew or recklessly disregarded that Ripple’s offers and sales of XRP violated Section 5 of the Securities Act of 1933.

“Second, Judge Torres rejected the argument that “the SEC must show that they knew or recklessly disregarded that Ripple’s actions were somehow otherwise ‘improper.’

“Instead, Judge Torres ruled that, to prove the necessary mental state for aiding-and-abetting liability, the SEC must simply show that Individual Defendants knew or recklessly disregarded the facts that constitute a Section 5 violation.

“In light of Judge Torres’ Order, it is clear that the SEC’s internal documents reflecting its staff’s thinking about XRP, Bitcoin, Ether, or any other digital asset – have no relevance to the Individual Defendants’ scienter”, the SEC argued.

While the SEC is leveraging Judge Analisa Torres’ ruling on the motion to dismiss, the SEC’s motion for partial reconsideration and clarification of the DPP ruling will be decided by Magistrate Sarah Netburn.

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