The case between Ripple and the United States SEC has taken a surprising turn. According to news lurking around the legal-crypto streets, Ripple has won against the SEC. In its lawsuit against Ripple, the Securities and Exchange Commission suffered the worst crypto-defeat to date.
This is definitely an interesting development, following on the heels of a U.S. court’s denial to recognize attorney-client privilege concerning internal papers pertaining to the “Hinman speech.”
Ripple bags an important win against the SEC
The court has denied the SEC’s claim that attorney-client privilege protects the production of records pertaining to William Hinman’s speech. According to Magistrate Judge Sarah Netburn, the SEC must make these documents.
On July 12, United States Magistrate Judge Sarah Netburn criticized the SEC’s hypocrisy after overlooking its dismissal request. According to the judge, Hinman’s speech — in which a former official Bill Hinman said that ETH isn’t security — was a private issue for him. Also, the SEC contended that he was privileged to protection because he had received legal counsel from the SEC to confirm the agency’s regulations.
Magistrate Judge Sarah Netburn:
The hypocrisy in arguing to the Court, on the one hand, that the Speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency, and on the other hand, that Hinman sought and obtained legal advice from SEC counsel in drafting his Speech, suggests that the SEC is adopting its litigation positions to further its desired goal, and not out of a faithful allegiance to the law.
The judge’s decision was described as a “body slam” by attorney James K. Filan, who observes the case closely. The complainant initially tried to claim the deliberative process privilege, but the agency blocked the effort in January. The court judged that collecting information from third parties does not fall within the area of the privileged activity immunity.
Numerous individuals within the XRP community have seen the Hinman speech draft, which the SEC has battled to keep secret, as a critical piece of evidence that might work in Ripple Labs’ favor. In late 2020, the SEC sued blockchain firm Ripple over assertions that Brad Garlinghouse and Christian Larsen sold Ripple’s XRP tokens as unlisted securities.
However, Ripple has differed that Bill Hinman, the former director of the Division of Corporation Finance, conveyed in 2018 that Ether (ETH) was not a securities transaction and this contradicts the SEC’s position on the issue.
The court’s decision effectively articulates that “the documents must be produced.” On the other hand, some people think that an appeal by the SEC is likely. The SEC mandates that Hinman’s trip was a “purely personal errand” and not planned to provide legal counsel.
The crypto industry and the financial guardians
The cryptocurrency industry has lately experienced its worst bloodbath. The decentralized environment has been harmed by recession concerns, macroeconomic factors, and crypto legislation. According to some critics, these financial regulators appear to have a feud against crypto to some extent. On the other hand, these organizations reason that they are guarding their citizens’ investments against the Wild West of finance.
The Ripple vs. SEC case is an outstanding example of this notion. Regardless, the decision may provide some solace to the cryptocurrency market, which has been on a downswing for quite some time. On the Hinman papers, Judge Netburn approved that if Hinman were a private citizen, this might potentially safeguard the documents. But the committee stated that Hinman would not have access to the information and resources if he had not already worked at the SEC.
If the content of the speech documents is powerful enough, it might be a game-changing juncture for Ripple. The case has been considered as potentially laying a legal foundation for other equivalent crypto token issuers.
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