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The SEC has exactly 2 weeks to file an appeal with respect to its motion denial, and the commission’s response within this time frame is crucial as it may set a precedent for related cases in the near term.
The ongoing legal dispute between the United States Securities and Exchange Commission (SEC) and blockchain payments firm Ripple Labs Inc took a positive twist in court in favor of the latter as Judge Sarah Netburn denied the regulator’s motion for Reconsideration of her previous DPP ruling, a win for the embattled crypto firm. According to court documents, Judge Netburn’s denial was based on the request by the SEC to shield documents under privilege in relation to a June 2018 speech made by the then-director William Hinman.
Per Hinman’s speech Bitcoin (BTC) and Ethereum (ETH) were not classified by the commission as securities. This is a detail that Ripple’s lawyers will like to gain access to in defending their position about allegations levied on Ripple for selling XRP as securities under the full knowledge of Chris Larsen and Brad Garlinghouse.
Since the case began back in 2021, the SEC has shared no objection to these documents falling outside of deliberative process privilege (DPP) protection as it posited that the Director’s speech was based on his personal views and does not showcase those of the agency. As the case progressed, the SEC changed its position and wanted a DPP protection for the same documents, a move Judge Netburn believes is against the ethics of the law.
“The SEC seeks to have it both ways, but the Speech was either intended to reflect agency policy or it was not. Having insisted that it reflected Hinman’s personal views, the SEC cannot now reject its own position,” Judge Netburn wrote in her decision.
Ripple Labs Inc’s Court Win: Is a Settlement on the Way?
The SEC has exactly 2 weeks to file an appeal with respect to its motion denial, and the commission’s response within this time frame is crucial as it may set a precedent for related cases in the near term. Should the SEC agree that the ruling stand, Ripple’s lawyers may make a number of huge discoveries in the commission’s internal documents that may help its case.
However, should the SEC fail to release its documents, it could as well imply that the commission will be suing for a settlement, and thus bring an end to the lawsuit. While the regulator seems to be on the edge, the odds, irrespective of how things play out seem to be in the favor of the embattled blockchain payments firm.
“This is not just a win for @Ripple and #XRPHolders, but for the judicial system. After the March 2021 hearing, I said we were lucky to get Judge Netburn. Some of you disagree, but I still believe it. The SEC is now officially in a hurt locker,” John Deaton, a Ripple community lawyer and founder of CryptoLaw said in a tweet.
What the SEC will be most cautious of is setting a precedent that may hurt its future enforcement actions, and this consideration will be adequately factored into its response that is expected in the coming days.