- Ripple has filed to further its motion to compel discovery of pre-clearance XRP trading data of SEC employees.
- The data would determine if SEC staff members were allowed to trade crypto, including XRP and other digital assets.
The Securities and Exchange Commission (SEC) versus Ripple lawsuit has been ongoing since December 2020. Ripple has now filed a response furthering its motion to compel discovery of pre-clearance XRP trading data of SEC employees. The company has filed an objection against the regulator’s claims of the Privacy Act and the burden of production. The SEC nonetheless, claims the irrelevance of data in the defendant’s letter motion to compel discovery.
Essentially, Ripple wants to determine whether SEC employees were cleared to trade in securities and digital assets. However, the SEC claims that this will violate the confidentiality of the financial details in the SEC’s Office of Ethics Counsel. Additionally, the regulator asserted that the information was collected to ensure employees’ compliance with the commission’s ethical norms. The requested information, therefore, is unconnected to determining whether Ripple transactions follow the SEC’s securities laws.
The commission reveals that the preclearance guideline specifically states that by, clearing a request to enter into a financial transaction, it does not determine as to whether the transaction complies with the securities laws. That express statement by the Ethics Counsel renders irrelevant the pre-clearance information Defendants seek.
Ripple objects to SEC’s Privacy Act claim
Arguing against the SEC’s Privacy Act claims, Ripple stated that the information sought is aggregate and can be entirely anonymized. Moreover, the data would only be of narrow scope and of a limited timeframe. Ripple’s motion to compel thus possess “no Privacy Act obstacle to the Court ordering production of this information.”
Additionally, Ripple has argued against the regulator’s “low bar of relevance” stance. Formerly, the Commission claimed that any statements other than its public “external statements” shall be marked irrelevant. Ripple pointed out, however, that these claims have been “considered and rejected by the Court on multiple occasions.”
Contesting this, the SEC firmly stated that pre-clearance is an absolute decision by the SEC’s Office of Ethics Counsel. The data hence bears no relevance to the case. Meanwhile, Ripple stresses the SEC’s part in advising the Ethics Counsel’s process of deciding if employees are forbidden from trading in securities and digital assets.
Defense argues objection of irrelevance
SEC Counsel stated;
Under the “low bar for relevance” established by Federal Rule of Evidence 401 and already recognized by this Court as having been met in connection with the SEC’s trading policies, Defendants are entitled to this information in discovery,
More to it, the defense clarified that the information requested is not burdensome to the SEC in any form. The record “span only a little more than a year.” Besides, SEC counsel had indicated orally that SEC employees were prohibited from trading XRP only post-March 9, 2019, Ripple claims. This last claim undermines the regulator’s objection as it proves that the agency had knowledge of and had researched the matter.