Stop me if you think you’ve heard this one before.
San Francisco-based blockchain firm Ripple has scored yet another win in its ongoing high-stakes legal tussle with the United States Securities and Exchange Commission as the court has denied the SEC access to Ripple’s lobbying efforts.
New Development In Case Against Ripple
Magistrate Judge Sarah Netburn of the District Court for the Southern District of New York ruled on June 15 that evidence of Ripple’s XRP lobbying efforts is irrelevant.
“In the same vein, Ripple’s lobbying efforts regarding the status of XRP are not relevant; and any relevancy argument is outweighed by the burden of production,” Judge Netburn stated.
The most important point in the Ripple lawsuit revolves around whether XRP is a security or currency. The SEC has alleged since last December that Ripple raised roughly $1.3 billion via an unregistered securities sale of its XRP cryptocurrency since 2013. Ripple and its executives have fought back against these accusations with powerful arguments.
On May 25, the SEC asked Judge Netburn to compel Ripple to submit documents that it argued would help show the payments firm engaged in lobbying efforts to confuse the public in regard to XRP’s regulatory status.
The SEC’s attorneys also observed that Ripple “relies on statements that it paid that official to make to support its litigation position”. The official in question is former Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo, who after joining Ripple, declared that XRP does not qualify as a security under U.S. law.
In her ruling, Judge Netburn also rejected SEC’s request for documents post-dating the filing of its official complaint. The judge dismissed the request without prejudice — meaning the SEC can refile it later.
Concurrently, the magistrate judge has in part allowed SEC’s motion to conduct more depositions. As such, the plaintiff will be allowed to depose more Ripple staff, including former chief financial officer Ron Will.
Although most of SEC’s motions were denied in what is potentially a shaky case against the fintech firm, Netburn granted the agency’s request to extend the discovery schedule of the lawsuit by two months. The SEC had argued that it was preparing to disclose tons of emails and internal communications about bitcoin, ethereum and XRP, and it needed more time.
Attorney Jeremy Hogan, who is also an XRP supporter, noted that the 60-day extension has pushed the summary judgement to December this year or January. In other words, if no settlement is reached soon, the SEC v. Ripple case is likely to drag on to early 2022.