Ripple is a currency and also has a utility, says Judge Netburn. This statement made the SEC attorney fumble. A winning strike for Ripple.
This SEC vs. Ripple hearing was one of the most crucial hearings, considering the two big bombshells that were dropped in it.
Everyone that has attended hearings would tell you that they are pretty mundane. But when it comes to the SEC vs. Ripple recent hearing, it was anything but mundane.
To freshen up our memories, let me summarize quickly that multiple motion summaries are pending in this case so far. These motions are:
(i) The discovery of financial documents by the SEC related to Brad Garlinghouse and Chris Larsen. That is what the recent hearing is all about.
(ii) The SEC’s notice to strike Ripple’s fair notice defense, individual defendants – Brad and Larsen’s motion to dismiss the lawsuit against them.
(iii) Ripple’s motion to compel the SEC to inquire why it took seven years to sue Ripple.
What’s the Recent SEC vs. Ripple Hearing is all About?
The SEC wants financial information from Brad Garlinghouse and Chris Larsen.
They want pretty detailed financial information from them, including bank accounts, checking accounts, everything that the SEC could lay their hands on.
It is important to point out that Brad and Chris have already shared the XRP trading-related documents with the SEC.
So, the question is, why is the SEC then asking for more financial documents from Brad and Chris?
It is nothing but a strategy that attorneys commonly use. There are only two reasons to obtain such information.
The first is that the SEC wants to catch Brad Garlinghouse and Chris Larsen in some discrepancy.
For example, the SEC may raise a question about the difference between the money that the founders made by selling XRP and what they received in their bank accounts.
It makes the counterparty look bad, which will help the SEC in the case.
The second reason is the most likely one. Here, the SEC is trying to make Brad and Chris, the rich guys, look bad by pointing out their splurge.
The SEC wants to make Brad and Chris look filthy rich and leave a bad impression about them.
How did the Judges Respond to the SEC’s Request?
Judge Netburn saw what the SEC’s request for the financial documents was all about. She asked a particular question to the attorneys of the SEC:
“Do you have any records that the trading financial records are incomplete or somehow fraudulent?”
The SEC’s response to that question by Judge Netburn was pretty bad as they weren’t prepared for such questions.
It is quite obvious from the Judge’s question that the judges won’t permit the SEC to ask for detailed financial documents from Brad and Chris.
Ripple’s case was further strengthened by Matthew Solomon, Ripple’s attorney, who worked with the SEC for three years.
A Bombshell From Judge Netburn
One of the most crucial points of the recent SEC vs. Ripple case came after 15 minutes of the hearing.
Interrupting Attorney Solomon, Judge Netburn said that she believes that XRP does not only have a currency value but it also has a utility. That utility disguises it from Bitcoin and Ethereum.
Attorney Solomon disagreed with Judge Netburn and pointed out that XRP is similar to Bitcoin and Ethereum.
So, what’s the fuss about Judge Netburn’s comments when Attorney Solomon disagreed with Judge Netburn’s comments?
Well, this proves that the Judge has done some research. But she hasn’t yet fully understood the concept.
You see that Ethereum, too, has quite a lot of utility. As we already know that Ethereum has already been given a pass by the SEC.
This statement from Judge Netburn can play an important role in the case as regardless of what the SEC argues, currency and security are not similar.
One can use the currency to procure things of value, whereas security denotes ownership in an enterprise.
That’s exactly what Ripple is trying to prove in the court that XRP is a cryptocurrency that is equal to a currency and has a utility.
Judge Netburn is not the Main Judge in the SEC vs. Ripple Case
The recent hearing was with Judge Netburn, a magistrate judge.
She isn’t the main judge in the case but Judge Torres, the main judge in the case, and Judge Netburn are like a team in the federal court.
It means that they talk about the cases and discuss them, which points to the fact, that somewhere Judge Torres also believes the same about XRP what Judge Netburn does.
At the least, Judge Torres knows that Judge Netburn considers XRP as a token that is a currency and also has a utility.
Will US-based Exchanges List XRP Again?
Judge Netburn remarked to the SEC attorney that based upon his theory, anyone who sells XRP is dealing in illegal securities.
She was pretty skeptical about this while she asked this question to the SEC attorney. Responding to the question asked by Judge Netburn, the SEC’s attorney replied:
“No! Under section 4, only Ripple and its affiliates can have sold XRP illegally.”
It is important considering that any exchanges that delisted XRP would not be held liable under the securities law.
They will not be prosecuted even if the US-based exchanges relist XRP on their exchanges.
The SEC’s response to Judge Netburn’s question about the responsibility of third parties in selling XRP tokens may lead to US-based exchanges relisting XRP again. It will be a breakthrough moment that every XRP holder was waiting for. Overall, Ripple is in an even stronger position after the recent SEC vs. Ripple hearing than it was previously.
Ripple has maintained an upper edge in the lawsuit so far, and so far, all is good for them. It would be interesting to see how the next hearing goes for Ripple and if they will still maintain the upper hand in the case.
Do you think that the US-based cryptocurrency exchanges will relist XRP again after the latest SEC vs. Ripple hearing? Let us know below in the comments.