Ripple’s lawyers put a wonderful defense again – the SEC is on backfoot now. With Ripple trying to secure an early win, is it time to buy more XRP?
Amid the worst week for the crypto world in 2021 so far, which began with Elon Musk’s tweet against Bitcoin, we are finally hearing some exciting news that will brighten up many crypto users. The news is about Ripple’s big win in the recent hearing of the SEC vs. Ripple case. Yesterday’s hearing was all about piercing the attorney/client privileges of Ripple & its lawyers.
High Public Interest
The public interest in the SEC vs. XRP lawsuit is at an all-time high, with XRP holders joining the call in droves in every hearing. In Friday’s hearing as well, the number of people listening to the hearing maxed out at 4000. Judge Netburn again allowed the SEC to send formal requests to foreign financial regulators for documents related to XRP. But unlike before, the SEC will have to inform Ripple about which documents they are asking for.
SEC Playing Dirty, Says Ripple
In response, Ripple argued that the SEC is using bullying tactics, whereas Ripple had no such capabilities as a private company. Ripple’s lawyers also said that the SEC is trying to scare away Ripple’s business partners in other countries. It is likely to be correct as litigation is all about getting an upper hand at any cost and the SEC, being a governmental body, has powers to play very dirty.
But Ripple has no proof to back their claims, and that is why Judge Netburn asked Ripple’s lawyers to present any evidence if they have as she is not going to give a judgment based on a mere assumption.
The SEC Eyeing Opinion Letters From Ripple’s Lawyers
Previously everyone believed that the SEC is trying to get their hands on Ripple’s lawyer’s opinion letters on XRP. But this hearing showered light to the fact that the SEC already has the opinion letters from Ripple’s lawyers from 2012 and 2015. The 2012 letter is especially a matter of concern as it says that XRP could be a security.
Why is it Important?
To understand the importance of this, we must first know about the two defenses that Ripple is putting against the SEC’s lawsuit against it. First, XRP is not a security, and second, even if XRP is security, Ripple did not receive a fair notice defense pointing that XRP is a security.
A lack of fair defense notice puts the SEC at backfoot against Ripple as it puts the blame squarely on the SEC. After all, the SEC should have sent a fair notice defense to Ripple if they believe that XRP is a security and they knew it for many years. Thus, the SEC is trying to pull the trigger by keeping the gun on the shoulder of Ripple’s previous lawyers.
The SEC wanted to prove in the court that Ripple’s lawyers had warned Ripple at the beginning that XRP could be a security. To back their claims, the SEC quoted the Scott v. Chipotle case. They did it knowingly as the decision on that case was made by Judge Netburn. In Scott v. Chipotle case, Judge Netburn forced Chipotle to hand over the previous letters from its lawyers.
Quoting Scott V. Chipotle Case Backfired
Even before the hearing began, Judge Netburn asked the SEC lawyers if they had any case that said that fair defense notice was subjective. Here, the focus is on what a normal person with average intelligence knows. You see, the thing with fair defense notice is that it is objective.
By the standard of objective, it refers to what a normal person knows. Thus, if a lawyer had advised Ripple’s management that XRP is security then it is relevant for the case. It means that the SEC can get its hands on the opinion letters of Ripple’s lawyers.
Judge Netburn Cancels out the SEC’s Argument
Throughout the hearing, the SEC was trying to prove that what Ripple was doing is Good Faith Defense. But they were calling it a Fair Notice Defense. The SEC lawyers stuck to his point throughout the hearing, but Judge Netburn did not accept the argument.
Judge Netburn was asking for hard evidence from the SEC, and without it, there is no way she was accepting the SEC’s argument. Thus, it is likely to result in the motion being denied. It will become another failure in the kitty of the SEC against Ripple.
The Most Crucial Part of the Hearing
Now comes the most crucial part of the hearing. The SEC is trying to strike or throw out Ripple’s lack of fair notice defense. If Judge rules in favor of the SEC, it would be a big blow to Ripple. But Judge Netburn was very clear on the issue, and she raised a question that the SEC itself had clarity on the matter or not.
The SEC attorney also disclosed that they got to know from Ripple’s attorney that Ripple will file a Summary Judgment on its Fair Notice defense in August. It is early and is scheduled even before the discovery period ends. Now, if Ripple secures a win here, the case will end right then & there. XRP’s status will still be in limbo, but the SEC won’t be able to sue Ripple. The reason is that no one had fair notice anyway.
The recent SEC vs. Ripple hearing was among the most important ones, and again, Ripple has maintained an edge over the SEC in the lawsuit. Ripple had to endure a setback when Judge Netburn allowed the SEC to reach out to foreign financial regulators to demand XRP-related documents from Ripple’s partners in respective countries. But it is obvious now that Judge Netburn is very objective in her judgments.
If Ripple’s lawyers continue to defend Ripple with strong evidence and arguments, the case will most likely result in Ripple’s win. The Hashant team will keep our readers updated with all the latest happening in the Ripple vs. SEC case.