SEC trashes Ripple’s XRP status defense and reiterates privilege

Rick Steves

“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.”

The SEC has filed its Letter Brief as previously ordered by Judge Sarah Netburn on the August 31 telephone conference.

The Judge will be performing an in-camera review of the documents the Securities and Exchange Commission claims are privileged. According to the letter, the plaintiff says all documents are protected by DPP.

“The SEC respectfully submits that all documents referenced in Appendix A of Defendants’ motion to compel (Dkt. 289, “Motion”) are predecisional and deliberative and therefore protected by the deliberative process privilege (“DPP”).

“Many are also protected by the attorney-client privilege and the work product doctrine. The compelled release of the SEC’s
predecisional deliberations relating to digital assets would discourage meaningful deliberation among SEC officials and staff relating to investigations, potential cases, and other regulatory activities taken or under consideration in a field where regulation carries significant consequences for the financial markets.

“Additionally, the documents are irrelevant to Defendants’ proposed defenses — even under Defendants’ relevance theory. 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. Motion 4. But none of the documents on Appendix A, except for Entry 2, address whether transactions in XRP are securities.

“The Court should not pierce the SEC’s DPP and other privileges, particularly when the documents are irrelevant to Defendants’ proffered defense”, the agency continued, adding that “piercing the government’s privilege as a litigant over materials prepared in advance of litigation would be extraordinary and inappropriate.”

“This Is It” moment for XRP in Ripple lawsuit, legal experts say

FinanceFeeds has covered the hearing and Jeremy Hogan’s analysis. Now, the lawsuit agenda has September 20 as the next date: the deadline for the depositions of Brad Garlinghouse (Sept 14) and Chris Larsen (Sept 20), which should have originally taken place in August.

Ripple’s turn to oppose this letter brief from the SEC will be on September 28. The defendants are expected to file a motion in opposition with relevant commentary to the SEC’s arguments.

Judge Sarah Netburn will then perform the in-camera review of the SEC’s internal documents in question and, taking into account both the SEC and Ripple’s arguments on the matter, will make a ruling regarding the Deliberative Process Privilege (DPP) claimed by the regulator.

Those documents, which the SEC refuses to hand over to Ripple despite the Judge’s past insistence, relate to the SEC’s internal discussions over the nature of XRP, BTC, and ETH.

In the meantime, Ripple has been ordered to deliver its Slack messages to the SEC, which are expected to be useful to the agency’s argument that Ripple and its individual defendants marketed XRP as a security.


Read this next

Industry News

Celsius $750m insurance claims are fraud, says lawyer seeking EU crypto superfund

“It is an intentional deception in aid of a billion-dollar securities offering.”

Institutional FX

DGCX brokers authorized to provide derivatives trading and clearing services

The DFM is looking to provide multiple asset classes such as; equities, ETFs, equities’ futures, crude oil futures, etc. to meet the growing demand from its diversified base of local and international investors.

Digital Assets

EQONEX leaves “crowded crypto exchange space” amid crypto winter

“The recent extreme market volatility and declining trading volumes have added to the headwinds being felt by exchange operators. We take a realistic view that our exchange will not move the needle for us financially over the near-to-medium term.”

Digital Assets

FTX and Paradigm partner for spreads trading: lower risk, lower fees

“This structured spread trading product is the first that will enable crypto investors to utilize cash and carry trades through FTX and Paradigm.”

Industry News

SEC uncovers online retail brokerage hacking scheme

Fraudsters were able to sell their holdings at artificially high prices and reap more than $1 million in illicit proceeds, the SEC alleged. 

Executive Moves

Cornerstone FS taps James Hickman as CEO

“I see great potential in the business from its proprietary technology to its regulatory permissions. It is already delivering an exceptional service to its SME customers and the scalable platform is ideally positioned to add further product capability.”

Retail FX

FCA warns of Lite Forex Pro as crackdown on clone scams continues

The UK Financial Conduct Authority has put out a press release that warns about a new ‘clone firm’ investment scam impersonating LiteForex‎, which rebranded last year as LiteFinance.

Digital Assets

Novogratz’s Galaxy Digital backs out of $1.2 billion deal to buy BitGo

Crypto merchant bank Galaxy Digital would not move forward with its bid to buy digital-asset custodian BitGo.

Executive Moves

OctaFX elevates Nikolas Charalampous to executive director role

OctaFX has promoted its head of dealing, Nikolas Charalampous, to the role of executive director, which saw the expansion of his day-to-day responsibilities and oversight.