Judge Sarah Netburn has dealt a blow to the SEC in the Ripple Labs V. SEC legal trial. According to a legal memo, the judge denied the Security and Exchange commission access to Ripple’s legal communications.
The United States Security and Exchange Commission had requested a motion that would have required Ripple Labs to produce records of “all communications constituting, transmitting, or discussing any legal advice Ripple sought or received as to whether its offers and sales of XRP were or would be subject to federal securities laws”.
Unfortunately for the SEC, judge Netburn denied the motion, stating that:
“Ripple asserts that the SEC’s requested communications are protected by the attorney-client privilege, which has not been waived.”
The legal battle between the regulator and the blockchain company recently saw Judge Netburn requiring the SEC to disclose any existing documentation on whether Bitcoin, Ether and XRP are securities. While this ruling excluded internal communications, the SEC maintained there was no communication of this kind.
Judge Netburn has ruled in favour of Ripple nabs on a number of occasions, In April Judge Netburn also denied the SEC access to Ripple’s finances, stating that the records were “not relevant or proportional to the needs of the case”.
Ripple’s main defense is its ‘Fair Notice’ defense which Jeremy Hogan, an attorney who has been following the case claims is significant for any other cryptocurrency company who the SEC may go after next:
“It becomes persuasive authority for any crypto company the SEC sues from this point forward. If the Fair Notice defense survives and Ripple wins, the SEC is going to have an uphill battle winning any other lawsuit they bring."
The Fair Notice defense argues that Ripple Labs had no substantial notice from the SEC on whether selling XRP would constitute an illegal securities offering. Hogan affirms that:
“Even if Ripple loses the Fair Notice defense, they can appeal the ruling. And if an appellate court determines that Judge Torres was wrong and Ripple did not have Fair Notice, then the SEC is now really in trouble because that ruling is binding on every crypto lawsuit that comes along”
The case seems very far from reaching a settlement, and the battle between the SEC and Ripple Labs looks like it will continue to drag on, with small victories positioning Ripple as a potential victor.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.