SEC loses once again! One more big blow to the SEC in the SEC vs. Ripple lawsuit when Judge orders the SEC to search and share any documents related to the XRP, Bitcoin, and Ethereum.
The recent SEC vs. Ripple hearing proved to be a big blow to the SEC. Ripple answered the SEC lawsuit with seven affirmative defenses, among which the most important one was Ripple’s fourth affirmative defense. It was really interesting that the Judge presiding over the hearing again referred to XRP as just like other cryptocurrencies.
Ripple’s Fourth Affirmative Defense
It was a fair notice claim, and it is a complete defense under the securities violation under the United States constitution. The argument was that the defendant Ripple lacked fair notice that its conduct was prohibited. It was followed by a request from Ripple for any documents from the SEC related to the security status of Bitcoin and Ethereum.
This is a crucial part of the hearing as the SEC’s decision to consider Bitcoin and Ethereum as not a security could have led Ripple to believe that XRP is not a security either.
The SEC in Quagmire
Understandably, the SEC does not want to share any documents related to Bitcoin and Ethereum with Ripple. The SEC wants to get rid of this argument, which is Ripple’s strongest defense. To counter Ripple’s demands for documents, the SEC moved to strike the fair notice defense to remove it from the case entirely.
This tactic isn’t something new as it is common in the legal world. If the SEC’s strike the fair notice defense gets the Judge’s nod, it can turn out to be a big blow to Ripple.
Judge’s Questions to the SEC Lawyer
The Judge started the hearing by asking five very pointed questions to the SEC lawyer. She asked the SEC why they are relying on case authority to make their argument about why Ripple should not be allowed to demand any SEC documents related to Bitcoin and Ethereum. Instead, the Judge asked the SEC to follow an independent basis as to why Ripple shouldn’t be allowed to access the SEC documents on Bitcoin and Ethereum.
The next question from the Judge was about the SEC’s lawsuit against Brad Garlinghouse and Chris Larsen. She asked that any of the cases that they referred to included any lawsuits against any individuals. Answering the Judge’s question, the SEC attorney was in negative.
Going off the point, the SEC attorney also argued that the SEC shouldn’t share any documents on Bitcoin and Ethereum as, unlike XRP, there was no ICO for Bitcoin and Ethereum.
Commenting on this point raised by the SEC attorney, Judge said that if the SEC attorney wants her to comment on it, this would mean an entire ruling on the SEC vs. Ripple case. But the whole purpose of the discovery process is for both parties to prepare for the case. Thus, there is no place for a unilateral decision on what is relevant and what is not.
The Judge ordered the SEC to search and share any documents related to the XRP, Bitcoin, and Ethereum, where any third party was involved. The only good thing for the SEC was that the Judge said no informal communications about Bitcoin and Ethereum needed to be produced and shared with Ripple.
If any documents could weaken the SEC’s case against Ripple beyond repair, the SEC will look to get out of the case within the next 30 days. It indicates that there’s a chance for an early resolution to the case.
With XRP tokens achieving their highest price within the last year, it would be interesting to see how far it goes if the SEC vs. Ripple case goes in the favor of Ripple. So far, that’s what indications are as Ripple has maintained an upper edge against the SEC in the lawsuit.