“Did your employees trade XRP?” Ripple goes after SEC staffers as discovery deadline pushed

  • Ripple has filed a motion that is seeking to compel the SEC to disclose whether its employees traded XRP as it seeks to prove the SEC didn’t consider digital assets as securities.
  • Elsewhere, a judge has approved a joint request between Ripple and the SEC to extend the discovery deadline until November 12.

Did your employees trade XRP, Ether or Bitcoin? This is what Ripple Labs Inc. wants the US Securities and Exchange Commission to reveal. In its latest filing, the company is going after the watchdog as it seeks to prove that the SEC didn’t consider cryptocurrencies as securities and further build on its fair notice defense.

The motion was filed by the legal team representing Ripple, CEO Brad Garlinghouse and chairman Chris Larsen.

The Ripple team filed the motion to request a conference “regarding the SEC’s refusal to produce certain information necessary to complete Defendants’ understanding of the SEC’s trading policies governing digital assets and whether the SEC permitted its own employees to trade XRP.”

They are specifically seeking anonymized documents that reveal trading preclearance decisions regarding XRP and the other two top cryptocurrencies. Alternatively, the SEC can produce that information in aggregate form. They also seek certifications concerning SEC employees’ XRP holdings.

This is not the first time the two factions are engaging in a battle over internal trading policies. Ripple won the earlier battle, with the judge compelling the SEC to produce these policies. And it got what it was looking for, with the “Ethics Guidance Regarding Digital Assets” revealing that the regulator only started prohibiting cryptocurrency purchases in 2018.

Support for Ripple lack of fair notice defense as deadline is pushed

The motion further claims:

This evidence provides strong corroboration of the Defendants’ defenses in this case and undermines the SEC’s claims. Specifically, the now-acknowledged fact that the SEC itself did not restrict its own employees from selling or buying XRP, notwithstanding its longstanding regulation against its employees engaging in securities transactions without preclearance, indicates that the SEC had not concluded, prior to at least January 2018, that sales and offers of XRP were securities transactions.

This latest battle goes towards the defense that Ripple has been holding onto since day 1 – that the SEC failed to give fair notice to cryptocurrency companies.

In its motion, it claimed, “Likewise, it supports Ripple’s fair notice defense: that the SEC itself had not concluded that sales and offers of XRP were transactions in securities is evidence that market participants lacked the requisite fair notice that XRP later would be deemed a security.”

This latest battle comes amidst a push by the two factions to push the discovery deadline – a push that the judge has now approved. The two jointly filed a motion in the Southern District of New York on August 24. And now, Judge Analisa Torres has granted the motion.

Also Read: The irony: After suing Ripple, Jay Clayton has now joined a $2B firm that supports XRP

About Author

Steve has been a blockchain writer for four years, and a crypto enthusiast for even longer. He is most excited by the application of blockchain to solve the challenges facing developing nations.

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