Jeremy Hogan, Parnter at Hogan & Hogan, reveals that CryptoLaw has shared American Fintech Ripple’s response to the US Securities and Exchange Commission’s (SEC) letter which is disputing (essentially) “parts of the Court Order” from earlier in April 2021 that are “related to internal communications.”
CryptoLaw posted Ripple’s response to SEC’s letter disputing (essentially) parts of the Court Order from earlier this month related to internal communications. It is CLEAR that the SEC has failed in good faith to comply with at least a part of the Order. If I was Judge…(cont’d) https://t.co/IJFjgEles0
— Jeremy Hogan (@attorneyjeremy) April 29, 2021
According to Hogan, it’s quite clear that the SEC has “failed in good faith to comply with at least a part of the Order.” Hogan also noted that if he was the Judge in this matter, then the SEC attorney would “leave the hearing on this with red ears if not sanctions of some sort.”
“I wouldn’t be surprised if she adds this issue to the hearing for Friday. If she does, it’s probably because she is upset and I would expect the sparks to fly.”
JUST ADDED to our Document Library:
✅@Ripple‘s response to @SEC_Enforcement ‘s Letter Motion asking Judge Netburn to prevent access to key internal documents related to #XRP #BTC & #ETH.
It’s a barn burner. Read it here 👇https://t.co/6dreP3XKyM
— CryptoLaw (@CryptoLawUS) April 28, 2021
In its document pertaining to Ripple’s response to SEC Enforcement’s Letter Motion asking Judge Netburn to “prevent access to key internal documents” related to XRP Bitcoin (BTC), and Ethereum (ETH), CryptoLaw noted:
“We write on behalf of Defendants Ripple Labs Inc., Bradley Garlinghouse,
and Christian A. Larsen, in response to the SEC’s April 21, 2021 letter. That letter improperly reargues two positions the Court rejected at the April 6, 2021 discovery conference: that SEC internal documents are categorically exempt from discovery, and that the SEC can invoke the deliberative process privilege without searching for responsive documents, asserting the privilege on a document-bydocument basis, and producing a privilege log.”
As stated in the document, the Court’s Order was “docketed on April 8, 2021 (ECF No. 102).” The SEC “sought neither reconsideration nor Rule 72 review of that Order and the 14-day period to do so has now expired,” the document noted.
As mentioned in the paper:
“The SEC has disregarded the Court’s Order on both points. The SEC has also ignored the Court’s directive to meet and confer in good faith on the scope of production. On April 14, 2021, the SEC admitted that it had responsive documents, but told Defendants that it needed more time to consider its final position as to whether and what internal documents it would produce.”
Just a few hours before the parties’ “scheduled meet-and-confer,” the SEC decided instead to submit its letter stating that, “under the terms of the Court’s Order, it could refuse to produce any and all internal agency communications.”
The Court “should reject this misreading of its Order and direct the SEC promptly to produce responsive internal documents,” the CryptoLaw document recommends.
Back in December of last year, the SEC had posted a complaint alleging that Ripple engaged in the sale of an unregistered security. The enforcement action included Larsen, the company’s co-founder, executive chairman of its board, and former CEO, and Garlinghouse (as mentioned above), the company’s current CEO. The SEC alleged that Ripple and the two respondents had raised over $1.38 billion through an unregistered, ongoing digital asset securities offering.
In the days following the revelation of the lawsuit, XRP, the native crypto of Ripple, had dropped significantly in value. At the beginning of 2021, XRP was trading for around $0.22 but the digital asset is trading at $1.40 at the time of writing and managed to break all-time highs as part of the wider crypto market rally. XRP price has surged presumably due to seemingly positive news for Ripple so far in its ongoing lawsuit with the SEC.
As covered earlier this month, Ripple had won a discovery motion regarding internal SEC discussions about whether Ripple’s XRP is more of a digital currency, similar to Ether or Bitcoin, or something else. The SEC has publicly stated that Ether is not a security as it is sufficiently decentralized. The nuance is important as the SEC does not regulate currencies nor commodities – only securities.
While fighting the Feds tends to be a losing battle, Ripple does have some things going for it. First, Ripple reportedly has significant funds on hand for a prolonged battle, and second, Ripple has hired some good attorneys to fight its battle, a law firm that includes former SEC Chair Mary Jo White who believes the Commission is “dead wrong” in its pursuit of the company.