[Blockchain Today Correspondent Han Ji-hye] Whether Ripple’s executives were warned about possible SEC lawsuits when XRP was launched will soon be revealed.
On the 16th (local time), Cointelegraph reported that Ripple would release documents related to 2012 that had been sealed until the 17th. Accordingly, the legal battle between the US Securities and Exchange Commission (SEC) and Ripple is expected to enter a new phase.
The legal battle between Ripple and the SEC began on December 23, 2020, when the SEC filed a lawsuit against Ripple Labs Inc. According to the lawsuit, Ripple has raised more than $1.3 billion by selling XRP tokens without listing them as securities. However, Ripple countered this, saying, “XRP is not an investment product, but a tool that facilitates payments internationally, so the SEC’s jurisdiction does not extend to the token or sale.”
According to the report, the SEC’s lawsuit against digital asset issuers had previously occurred and it was customary to reach a settlement before trial, but Ripple chose to go to court. Therefore, since there is no precedent for similar cases, it is expected that the SEC’s position on digital assets will have a significant impact depending on who the winner is.
If the SEC wins, court decisions will support the SEC’s claim to use the relevant securities laws to regulate large portions of the cryptocurrency market because they have passed the test. Conversely, if Ripple dominates, the SEC’s regulatory ambitions will be hit hard, and the need for a more fine-grained regulatory framework tailored to different types of digital assets will become apparent.
Currently, in this lawsuit, Ripple asserts that “I did not know that the XRP token could be classified as a security” as to the claim of ‘unregistered securities’, which is the basis of the SEC’s litigation. It is known that they are fighting with the logic of saying that “there should have been a notice, and a fair notice was not given.”
However, Peter Vogel, adviser to the Blockchain Task Force at law firm Foley & Lardner, told Cointelegraph: “It turns out that Ripple is aware that the SEC is likely to raise this issue. “If Ripple’s claim is not upheld, then litigation judge Analisa Torres has ruled that Ripple’s lawyers should disclose legal memos before Ripple’s XRP launch by February 17. The SEC said that Ripple Ripple argues that it was well aware of the risk of suing the SEC because in 2012 it was advised that XRP would be regarded as a security under federal law. He added.
Ripple also said that at the Yahoo Finance All Markets Summit in June 2018, William Hinman, then director of the SEC’s corporate finance department, spoke about the SEC’s criteria for accreditation of securities. He countered that these remarks reflected the individual’s position, not the position of the institution. In response, Judge Anarissa Torres ordered the SEC to release emails and employee notes related to Hinman’s speech.
Amina Hassan, litigation partner at law firm Hughes Hubbard & Reed, commented that “the fight over the scope of the committee’s deliberative privileges is far more interesting” than the 2021 memo workshop. Hassan added that “if the court’s decision is valid, it will have a very broad impact, which could be disclosed in a similar case for SEC or other agency documents.” This decision will also help litigants find similar documents in the government.”
According to Cointelegraph, the meaning of the case could be interpreted as opening up the possibility for cryptocurrency companies to fight in court going forward against the SEC and other enforcement agencies to claim information of a kind that was previously inaccessible.
Meanwhile, legal experts predicted that ‘the interpretation of the 2012 legal memo could resolve part of this lawsuit, but the possibility of an agreement cannot be ruled out because the interests of both sides are too high’.
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