SEC v. Ripple: Court orders Ripple to hand over Slack messages
The defendants claimed such demand would likely take months to complete and come at a very significant cost. The SEC replied that the time-consuming process “should present no issue in this case” since there is “no realistic prospect that the parties will fully resolve this case for several months, if not longer”.
The SEC has been granted its motion to compel Ripple to deliver the firm’s terabytes of Slack messages, despite the defendants’ arguments.
“ORDER granting 283 Letter Motion. The Slack messages sought are relevant to the parties’ claims and defenses and proportional to the needs of the case. Any burden to Ripple is outweighed by its previous agreement to produce the relevant Slack messages, the relative resources of the parties, and the amount in controversy.
“Accordingly, Ripple is ordered to search and produce responsive documents from the Slack platform from the 22 custodians identified by the SEC”, said the court order in text only.
In the original motion to compel, the SEC had complained that Ripple’s data error and refusal to produce most documents have already been highly prejudicial to the SEC.
“Among other things, the SEC has deposed 11 Ripple witnesses using incomplete records of their communications. For the reasons set forth below, Ripple should be compelled to search and produce responsive messages from 22 of its email custodians”.
Ripple argued the SEC request was disproportionate and unreasonably duplicative of the defendant’s extensive production of over one million pages of discovery—including emails, documents, text messages, and responsive Slack messages for 33 custodians.
In addition, the defendants claimed such demand would likely take months to complete and come at a very significant cost.
In its reply, the SEC said the time-consuming process “should present no issue in this case” as the SEC does not object to Ripple’s production of the Slack messages while expert discovery occurs or even afterwards. The Individual Defendant’s motions to dismiss are still pending, the parties plan to file motions for summary judgment, and no trial date is imminent”, the SEC stated.
“In sum, there is no realistic prospect that the parties will fully resolve this case for several months, if not longer”, the agency continued, arguing there is no need to cut off discovery of documents that are critical to the trial and that Ripple agreed to produce until last month.
The SEC is trying to build a case that XRP was sold as an investment contract and therefore a security. The agency is likely to stay away from the technical issues of XRP (how the ledger was built, its (de)centralized nature, etc) “probably because the SEC realizes that is a losing argument for them”, attorney Jeremy Hogan said previously.
“So instead, the SEC is going to attack from a “marketing’ angle. The argument here is that Ripple marketed XRP like a security, treated it like a share of stock, tried to manipulate XRP price, etc. This is an attack from the flank and not the strongest argument – but it might be all the SEC has”, he explained.