Judge grants Ripple’s request for SEC’s internal trading policies as fair notice fight continues

A New York judge has granted Ripple’s request to have the SEC produce internal trading policies on Bitcoin, Ethereum and XRP.
With the documents, Ripple is seeking to find out if the SEC made any distinctions between XRP and other digital assets and use it to argue against the Howey test and fair notice defense.

A U.S federal judge has granted Ripple access to the Securities and Exchange Commission’s internal trading policies on digital assets such as Bitcoin, Ethereum and XRP. The blockchain payments company believes that through the policies, it can prove that the SEC didn’t treat XRP as a security, which will go directly towards building its defense against the SEC’s securities violations allegations.

Ripple’s lawyer James Filan revealed the victory by Ripple on Twitter. According to Filan, Judge Sarah Netburn found that the information on the trading policies “meets the low bar for relevance, including potentially with respect to the claims against the Individual Defendants.”

#XRPCommunity #SEC_News v. #Ripple #XRP The Defendants’ request for the SEC’s Internal Trading Policies is GRANTED. The Court finds that the information sought meets the low bar for relevance, including potentially with respect to the claims against the Individual Defendants.

— James K. Filan (@FilanLaw) June 23, 2021

The SEC has been fighting Ripple’s request for internal trading policies for several weeks now. The regulator termed the document request as needless and irrelevant. It has also since refused to cooperate with Ripple on the matter. However, with Judge Netburn taking Ripple’s side, the watchdog will have no option on the matter.

The judge, who plies her trade at the Southern District of New York, stated in her ruling:

The documents Defendants seek in this request are relevant because they show how the SEC itself has categorized and classified XRP and other digital assets, including bitcoin and ether, pursuant to its own policies.

A potential turning point for XRP

This could be a landmark moment for Ripple in its case against the SEC. If the documents prove that the SEC classified XRP similar to BTC and ETH, it could turn the case on its head.

Filan, the Ripple attorney, explained:

The SEC’s treatment of the trading in digital assets, including any distinctions it draws between XRP and other digital assets, is directly relevant to show the SEC’s own perspective on digital assets, which is relevant both to the applications of the Howey test and Ripple’s fair notice defense.

The attorney further revealed that the documents could significantly impact the SEC’s allegations that Brad Garlinghouse and Chris Larsen “recklessly disregarded that they were assisting RIpple in improper conduct.”

Should Ripple be able to prove that the SEC didn’t have any distinction between Ether, Bitcoin and XRP, the SEC could be in a tight spot and might even be forced to settle with the company to avoid what would be an embarrassing and impactful loss.

Let’s think about a worse-case situation for the SEC: It has internal policies that list SPECIFIC items that are being investigated and warns SEC employees that they not should trade them. XRP is NOT listed. Why not? If I’m the Judge, I certainly want to know why.

— Jeremy Hogan (@attorneyjeremy1) June 23, 2021

The XRP price has continued to plummet, although this is in line with a wider market trend and not just in relation to its legal woes. XRP is trading at $0.644 at press time, and although it’s slightly up in the past day, it has shed close to 25 percent over the past week. The volume in the past day has also dropped by close to 50 percent.

Related: Ripple vs. SEC possible settlement not happening this year; can only happen starting January 2022: Legal expert

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