The legal battle between Ripple and the SEC continues. Was the XRP sale an illicit securities deal? Ripple wants to strongly disagree here. After a few partial successes, the company strikes again.
Ripple requests access to XRP reserves from employees of the US Securities and Exchange Commission (SEC). With the related application the company underpins its own defense strategy in the process against the authority. The argument: In 2013, the Ripple team could not legitimately know that XRP should be classified as a security.
James K. Filan, attorney who is watching the trial on Twitter, filed the motion on Aug. 27 public. The Ripple attorneys call for “anonymized documents that reflect the decisions of the SEC to pre-authorize trading in XRP, Bitcoin and Ether.” In addition, they request anonymized or aggregated data on any XRP ownership from SEC employees:
The defendants have a right to know whether the SEC has allowed their own employees to sell, buy, and hold XRP as a market participant during the exact period in which the SEC now claims that the defendants were selling of XRP violated the law and acted recklessly.
SEC internally only on a hard crypto course from 2018
In the course of the application, Ripple argues that the SEC only made crypto investments of its employees with reservations on January 19, 2018, as cryptocurrencies are potentially securities. This is evident from the documents examined so far. It can be concluded from this that the stock exchange supervisory authority did not generally consider cryptocurrencies such as XRP as securities before. After all, trading in the latter has long been prohibited for SEC employees.
However, the SEC did not decide on a blanket, internal crypto trading ban in 2018 either. Instead, it should be decided on a case-by-case basis. Precisely for this reason, the Ripple lawyers are demanding specific documents that refer to XRP.
The request was preceded by four unsuccessful meetings in July and August. The court approved the release of the documents. The SEC now has until September 3.
Ripple vs. SEC: one after the other
The demand for insight into the internal decisions on XRP trading is only one stop in the dispute about whether XRP is a token or a security. There is a lot at stake for Ripple in the process that has been going on since December 2020. If the court is correct in the allegation that Ripple has been illegally selling a security for seven years, it could face a fine of up to 1.3 billion US dollars.
At the moment, it looks like Ripple is on the road to victory. In June, the court banned the SEC from viewing documents from legal advice given to the defendants. A few weeks later, however, it agreed to a Ripple application. Former SEC official Wiliam Hinman is therefore allowed to appear as a witness. Hinman still claimed in 2018 that Ethereum was not a security. His statement therefore plays into the hands of the defense.