All in all, the ruling can still be perceived as a win for Ripple: the SEC refused to prove its internal policy against holding XRP, which naturally raises questions. The judge denied the motion but ordered the SEC to produce said documents.
The Southern District Court of New York has denied Ripple’s motion to compel the SEC to produce preclearance trading documents in regard to XRP, BTC, and ETH, as well as certifications concerning SEC employees’ XRP holdings.
Ripple’s aim was to expose the SEC’s policies governing digital assets and their employees’ trading of XRP, ETH, and BTC. Those documents could support Ripple’s fair notice defense.
Ripple failed to justify intrusion into SEC employees’ financial conduct
The Court previously ordered the SEC to produce trading policies regarding digital assets, Judge Sarah Netburn explained. “Accordingly, the SEC produced a January 16, 2018 memorandum that provided ethics guidance to SEC employees on digital assets. Defendants represent, and the SEC does not dispute, that before the issuance of this memorandum, the SEC had no trading policy regarding digital assets”.
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“Four months later, on April 13, 2018, XRP was added to the SEC’s “Watch List,” a list of entities potentially subject to supplemental ethics rules. Defendants further represent that SEC counsel stated during a meet and confer on August 25 2021, that, after the formal order of investigation was issued as to Ripple on March 9, 2019, SEC employees could no longer trade XRP […] According to Defendants, the SEC has refused to produce any documents bearing on this statement.”
“Moreover, because the data related to Ethics Counsel’s preclearance decisions is not sufficiently probative, it cannot justify the intrusion into SEC employees’ financial conduct, even if anonymized or aggregated”, Judge Sarah Netburn argued in the letter.
SEC ordered to produce documents that prove employees could no longer trade XRP
“Defendants’ request for documents reflecting the SEC’s trading preclearance decisions with respect to SEC employees’ transactions in bitcoin, ether, or XRP, and annual certifications concerning SEC employees’ XRP holdings is DENIED”, the Judge ruled.
“The SEC is directed to provide Defendants any documentation supporting SEC counsel’s statement during the August 25, 2021
meet and confer that, after the formal order of investigation was issued as to Ripple on March 9, 2019, SEC employees could no longer trade XRP.
All in all, the ruling can still be perceived as a win for Ripple: the SEC refused to prove its internal policy against holding XRP, which naturally raises questions. The judge denied the motion but ordered the SEC to produce said documents.
The SEC seems to have made a major shift in its strategy in what has been called a “major admission of defeat” by attorney Jeremy Hogan.
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