SEC Provides Critical Records In Ripple Case

Internal emails and other documents from the Securities and Exchange Commission have been obtained by Ripple Labs Inc., which claims that they may help in its high-profile battle with the commission over the future of its XRP cryptocurrency token.

The so-called Hinman documents, which the SEC turned over on a judge’s order, are nonetheless kept in confidence. Stuart Alderoty, the general counsel at Ripple, tweeted on Thursday that he now felt “even better” about their legal arguments. A representative for XRP confirmed that the company has acquired the documents.

The majority of the papers concern a speech delivered in 2018 by William Hinman, a former director of corporation finance at the SEC. When the SEC announced in 2020 that it was suing Ripple and its top executives, claiming that the company misled buyers of its XRP token by failing to register it as a security and failing to provide adequate disclosure, it became crucial for the company that Hinman address the application of federal securities laws to digital assets.

Ripple is a commodity and is not regulated by the SEC

In contrast, XRP is a commodity and is not regulated by the SEC. The decision in the case, which concerns the scope of a “investment contract” under the law, could significantly affect SEC Chair Gary Gensler’s efforts to get regulatory authority over the cryptocurrency space. 

Since Ripple first requested the records a year and a half ago, the commission has attempted to prevent their release, first using the attorney-client privilege and subsequently the deliberative process privilege. However, the material met the criteria for relevancy under the “‘extremely broad’ concept of relevance used to resolve discovery motions,” according to the judge overseeing the case, Analisa Torres of the US District Court for the Southern District of New York, who said last month that the SEC had to turn over the materials.

Judge Torres has been urged by both Ripple and the SEC to give summary judgment in the matter. Brad Garlinghouse, the CEO of Ripple, has stated that he anticipates having a response to the SEC’s case by the first half of 2019. Both the commission and Ripple filed briefs opposing the other’s summary judgment requests on Friday.

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