Court orders SEC to disclose internal documents in Ripple case

U.S. District Judge Sara Netburn ordered the SEC to hand over to Ripple an email containing Hinman’s draft remarks by the former head of the regulator’s Division of Corporate Finance, in which he stated that Ethereum is not a security. This was reported by attorney James K. Filan.

Entry 1express the notetakers’ own thinking or reflect deliberations or communications among SEC staff, the SEC may seek leave for limited
redactions. Defendants’ motion is otherwise DENIED.https://t.co/XALwb3CXmQ

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) January 13, 2022

The speech concerns Hinman’s remarks at a Yahoo Finance conference in June 2018. At the time, the former official said that, for various reasons, Bitcoin and Ethereum are not securities. He did not mention the XRP token.

In the last several months, the SEC and Ripple have been wrangling over what information should be disclosed in the litigation. Lawyers for the fintech company sought to obtain a number of documents, including internal SEC communications about the content of speeches and other public communications.

The agency officials argued that these documents are protected by the deliberative process privilege (deliberative process privilege, DPP). This is a legal principle allowing the regulator to refuse to disclose papers or to testify, citing the confidentiality of information and sources.

In her ruling, Netburn agreed that some documents are indeed protected by the DPP. However, for other records, notably the email containing Hinman’s speech, this principle cannot be applied.

«If the personal views of agency staff do not influence the formulation or execution of politically oriented judgments, they are not protected by the DPP. Accordingly, emails relating to the speech or its draft versions do not precede decision‑making and are not deliberative documents that are protected», — the judge ruled.

Netburn also ordered the SEC to provide Ripple with certain records of agency staff meetings with third parties. For example, the company will gain access to the transcript of a meeting between officials and representatives of ConsenSys in 2016.

The Documents In Boxes Framed in Green Must Be Turned Overhttps://t.co/tF0q3zN1f0

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) January 13, 2022

Earlier, John Deaton, founder of the Deaton Law Firm, noted that in 2017 Hinman and ConsenSys CEO Joseph Lubin held a meeting, which “did not concern the Ethereum ICO,” but became “the beginning of a very mutually beneficial alliance.”

At the same time, the regulator is not obliged to disclose documents related to XRP’s legal analysis. The Commission may also refuse to disclose records of meetings between staff and Ripple representatives and interagency discussions.

In November 2021, Fox Business published a sweeping investigation into the SEC’s case against Ripple. Journalists suggested that the officials behind the filing of the suit could have been affiliated with Ethereum.

In December, the nonprofit legal watchdog Empower Oversight urged the SEC to disclose documents concerning potential conflicts of interest in the actions of former senior officials.

Earlier, Ripple chief Brad Garlinghouse acknowledged a successful resolution of the dispute with the SEC in 2022.

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