Ripple Labs gave a severe blow to Securities and Exchange Commission (SEC) after the presiding judge gave a ruling that one Ripple community lawyer sees as “a very big win for Ripple.” Presiding US Judge Sarah Netburn refused the SEC’s motion to reconsider hiding documents under privilege in connection with a speech given by the SEC’s then-director, William Hinman, in June 2018. Hinman stated in his speech that Bitcoin (BTC) and Ethereum (ETH) are not securities tokens.
The Director of Public Prosecution (DPP) exempts some papers in a case from disclosure by the government so that it can discreetly assess current policy based on the documents’ substance. The SEC then revised its position, arguing that the speech represented Ripple’s practises rather than Hinman’s personal opinions and so should be protected.
Previously, the SEC did not object to the documents falling outside of rulemaking privilege (DPP) protection since they appeared to affect only Hinman’s personal judgments rather than SEC regulations.
Judge Netburn stated that the SEC should not contradict itself by attempting to change its position. She wrote in her decision:
“The SEC seeks to have it both ways, but the speech was either intended to reflect agency policy or it was not. Having insisted that it reflected Hinman’s personal views, the SEC cannot now reject its own position.”
In summarising the important components of Judge Netburn’s refusal to reconsider, James K. Filan, a Ripple community defence lawyer with a substantial case file of financial and SEC issues, tweeted on April 13:
"The SEC seeks to have it both ways, but the Speech was either intended to reflect agency policy or it was not. Having insisted that it reflected Hinman’s personal views, the SEC cannot now reject its own position."
— James K. Filan 🇺🇸🇮🇪90k+ (beware of imposters) (@FilanLaw) April 11, 2022
Ripple community lawyer and founder of Crypto-Law.us tweeted that “The SEC is now in a wounded locker.”
This is not just a win for @Ripple and #XRPHolders, but for the judicial system. After the March 2021 hearing, I said we were lucky to get Judge Netburn. Some of you disagree, but I still believe it. The SEC is now officially in a hurt locker. https://t.co/MuSC8ORrd2
— John E Deaton (@JohnEDeaton1) April 11, 2022
Despite this seemingly significant verdict, the matter is far from over, and the SEC now has two weeks to appeal the decision. Much of the crypto industry is focused on the result of this case because it might determine the future of SEC complaints against crypto businesses for sales of unregistered securities.
If Ripple wins, the SEC may reconsider its aggressive action against the crypto sector. However, if the SEC prevails, the floodgates may open, and lawyers knowledgeable about cryptocurrency will have a cottage economy waiting for them.
Read more:
- SEC vs Ripple: New York court announces two rules on motion in XRP lawsuit
- SEC vs Ripple: SEC responds to Ripple motion to dismiss Dr Albert Metz report
