On Sunday (May 30), Jeremy Hogan, a partner at the law firm Hogan & Hogan, talked about Magistrate Judge Sarah Netburn’s latest ruling in the litigation brought by the U.S. Securities and Exchange Commission (SEC) against Ripple Labs.
On 22 December 2020, the SEC announced that it had“filed an action against Ripple Labs Inc. and two of its executives, who are also considerable security holders, alleging that they raised over $1.3 billion through an unregistered, continuing digital asset securities offering.““
Well, yesterday, the Honorable Sarah Netburn, who’s a Magistrate Judge of the U.S. District Court for the Southern District of New York, issued an order that denied the SEC’s motion to compel Ripple Labs („Ripple“) to“create all communications constituting, transmitting, or even talking any legal guidance Ripple sought or received as to if its offers and sales of XRP were would be subject to federal securities legislation.“
Below are a few highlights from Judge Netburn’s conclusion that explain why she ruled the way she did.
- „Ripple maintains that the SEC’s asked communications are protected by the attorney-client privilege, which has not yet been waived. The SEC counters which Ripple set its lawyer advice at issue by asserting a fair note defense and that the SEC is eligible for’test and rebut this defense.‘ „
- „In asserting that defense, Ripple claims that the SEC’s actions and inactions failed to give market participants with fair notice that the agency believed XRP a security. In support, it cites to the SEC’s eight- year delay in pursuing enforcement actions against Ripple because of its alleged securities violations– after XRP was recorded on over 200 cryptocurrency markets, billions of dollars of XRP sales transactions had occurred, and Ripple had entered a settlement with the U.S. Department of Justice and FinCEN that described XRP as a’convertible digital currency.‘ „
- „Ripple counters, however, that its fair note defense is drawn directly in the court s judgment in Upton v. SEC, 75 F.3d 92 (2d Cir. 1996). There, the suspect articulated a“ fair notice“ defense which was substantively different from’good religion.‘ „
- „The Court takes no position about if Ripple’s pleaded defense is cognizable or if it is going to prove meritorious. I hit only the limited question of if Ripple set its subjective state of mind or guidance of counsel issue merely by increasing the defense, thus waiving its own privilege. I conclude it did not.Soon after Judge Netburn issued her order, American lawyer Jeremy Hogan, who has provided invaluable commentary to the XRP community throughout this circumstance, took to Twitter to explain why this choice is so essential.
The fantastic news for XRP is that if the SEC fails to conquer Ripple’s“fair notice“ defense, it might make it even more probable for the SEC and Ripple to come to a sort of settlement that could offer XRP with adequate clarity for U.S. crypto exchanges to be able to re-list XRP.
This seemingly small but significant victory for Ripple Labs seems to have cheered up XRP investors. According to statistics by TradingView, now (as of 17:55 UTC on May 31), on crypto exchange Bitstamp, XRP is currently trading about $0.9959 up 11.63% in the previous 24-hour period.
DISCLAIMER
The views and opinions expressed by the writer, or any people talked about in this article, are for informational purposes only, and they don’t constitute financial, investment, or other information. Investing in or trading cryptoassets includes a risk of financial loss.
Photo by“vjkombajn“ through Pixabay
