Ripple filed a motion seeking disclosure of information about SEC staff transactions in Bitcoin, Ethereum and XRP tokens. This was reported by attorney James Filan.
#XRPCommunity #SECGov v. #Ripple #XRP Ripple defendants file Motion to Compel the SEC to produce documents showing whether SEC employees were permitted to trade XRP and other digital assets. https://t.co/WPLmYwk1SL
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) August 27, 2021
“The defendants seek to provide de-identified documents reflecting decisions regarding pre-clearance trading of XRP, Bitcoin, and Ethereum. Alternatively the data can be presented in aggregated form. The defendants also seek to provide certificates relating to XRP ownership by SEC staff”, the motion states.
Ripple noted that in response to prior requests the regulator declined to disclose any information necessary to understand the agency’s stance toward digital assets.
The filing states that up to January 19, 2018, the Commission did not treat digital assets as securities, therefore its staff “could freely buy, sell, and hold XRP with no restrictions.” confirmed by former SEC Director of Corporate Finance William Hinman.
“These arguments undermine the SEC’s position. The Commission did not restrict its employees from trading XRP, despite its long-standing rule prohibiting participation in securities transactions without prior authorization. This fact suggests that, at least until January 2018, the SEC had not concluded that XRP is a security”, the petition states.
The Commission noted that BTC, ETH and XRP never appeared on the “prohibited holdings” list. On the watch list, created by the SEC to monitor assets for individual review but not a full ban, XRP was added only on 13 April 2018.
The Commission must respond to Ripple’s motion by September 3. The regulator may again refuse to disclose the information.
On August 31 a hearing will be held, where the parties will discuss the deliberative process privilege (deliberative process privilege) of the SEC. This is a legal principle allowing the regulator to refuse to provide documents or testimony, citing confidentiality of information and sources.
The information the Commission declines to disclose mainly concerns its views on Ethereum. Judge Sarah Netburn has already ruled that these data are relevant for subsequent Howey test analysis.
Attorney Jeremy Hogan explained that XRP belongs to the same asset class as Ethereum, the second-largest cryptocurrency by market capitalization. In 2018 the SEC stated that ETH is not a security, therefore a similar conclusion should be reached regarding Ripple’s tokens.
According to Hogan, the SEC is trying to persuade the court that the agency did not take an official position on Ethereum’s status. The lawyer called it a gambit.
“The Commission acknowledges confusion over the status of digital securities in exchange for strengthening its position on the qualification of XRP as a security. … By asserting that the SEC did not take a definite position on Ethereum’s status, it may argue that comparing the two assets is meaningless. Will this argument work? That is a difficult question. But such a gambit, at least, allows the regulator to make a similar argument,” Hogan said.
Earlier the SEC filed a motion to the court seeking access to “terabytes” of Slack messages by Ripple employees. Filan said today that these data, as well as information relating to the deliberative process privilege dispute, will be kept from the general public until a decision on the respective motions is issued.
#XRPCommunity #SECGov v. #Ripple #XRP The Court has granted motions to seal regarding 1) the Slack communications dispute and 2) the privileges disputes. The motions to seal were granted pending resolution of the underlying motions. Both are Text Only Orders. Screenshot attached. pic.twitter.com/dubGlxW5dX
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) August 28, 2021
Ripple also requested documents from the cryptocurrency exchange Binance.