Ripple has won another win in its ongoing lawsuit against the US Securities and Exchange Commission because the court has denied the SEC access to Ripple’s legal advice.
Judge Sarah Netburn of the District Court for the Southern District of New York ruled Sunday to deny the SEC’s motion to force Ripple to file memos of XRP sales with the firm’s attorneys.
According to the SEC, Ripple could have known that XRP could have been a security from its legal advisers before moving on to token sales in 2013. The SEC filed a motion on May 7 to force Ripple to prepare any notices discussing legal advice. Ripple has inquired or received whether its offers and sales of XRP would be subject to federal securities laws.
In the most recent ruling, Netburn referred to legal confidentiality, which is intended to “promote full and open communication between lawyers and their clients, thereby promoting a broader public interest in compliance with the law and the administration of justice”. The judge found that Ripple did not waive its legal secrecy, although the defendants may waive it in certain circumstances.
The judgment also pays special attention to the principle of fair dismissal, which requires the courts to interpret ambiguous criminal laws in favor of the accused. In bringing this defense forward, Ripple alleges that the SEC failed to adequately advise market participants that regulators viewed XRP as a security.
“In support of this, the SEC cites the eight-year delay in pursuing enforcement actions against Ripple for alleged securities violations – even after XRP was listed on over 200 cryptocurrency exchanges, XRP sales transactions had run into billions, and Ripple had reached an agreement with the US Department of Justice and FinCEN, which described XRP as a ‘convertible virtual currency’, ”wrote Netburn.
The judge found that the SEC can renew its motion if Ripple “increases its convictions or relies on its privileged communications to aid its defense against fair communications”.
The latest ruling marks another milestone in the SEC’s battle against Ripple after regulators filed a lawsuit against Ripple Labs, CEO Brad Garlinghouse and Executive Chairman Chris Larsen in December 2020 alleging that XRP was worth an unregistered security offering of $ 1.3 billion. Ripple has managed to claim a number of legal victories, including access to the SEC’s internal cryptocurrency discussion history in April. The court also denied the SEC an opportunity to disclose Garlinghouse and Larsen’s financial records.
Last week, Garlinghouse confirmed Ripple’s plans to go public after the company resolved its case with the SEC, stating that the likelihood of this scenario was “very high at some point.”