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Ripple Responds to SEC DPP Decision; Claims agency wants to “redo”

In its ongoing lawsuit with the US Securities and Exchange Commission (SEC), fintech Ripple (XRD) has filed its opposition to the SEC and the regulator’s DPP ruling, claiming that the regulator is simply seeking a “renewal.”

In December 2020, the SEC has filed a lawsuit against Ripple and two of its executives — Christian Larsen, co-founder and former CEO of the company, and Bradley Garlinghouse, current CEO of the company, alleging that Ripple has raised more than $1.3 billion through a non-cash digital asset bond offering. registered and in progress.

The controversy in the case involves the SEC’s attempt to force Ripple to hand over the notes made by Matthew Estabrook, attorney for former SEC Commissioner Elad Roisman, but James Filan, attorney for Ripple, argues that this is protected by the DPP and is simply an attempt by the SEC to get another chance.

What is ‘Deliberative Process Privilege?’

The Deliberative Process Privilege (DPP) protects “documents that reflect advisory opinions, recommendations, and deliberations that are part of a process by which government decisions and policies are formulated” from disclosure.

The ongoing case with Ripple will certainly set a new legal precedent for how the DPP is applied and interpreted in the digital asset and cryptocurrency markets, as two recent reviews of the Southern District of New York distinguish how the privilege is applied.

Recap SEC vs. ripple

After the SEC filed its initial lawsuit in December 2020, cryptocurrency exchange Coinbase withdrew the asset XRP. Afterwards, Garlinghouse and Larson sent letters to Judge Sarah Netburn of the Southern District of New York to dismiss the case, citing a lack of “fair notice and due process.”

The SEC counterattacked, also sending a letter to dismiss the “fair warning” defense. The judge responded to the SEC and said she understands that XRP has utility, making it distinct from bitcoin (BTC) and ether (ETH).

The SEC then filed a motion to delay the release of its internal correspondence on bitcoin, ether and XRP until August 2021. The internal communication would have revealed the agency’s views on cryptocurrencies in general.

The SEC requested a 60-day extension to the discovery of the fact, which was granted.

During this time, Filan evaluated the motion, advising the community that it may still be a while before a conclusion is reached.

Ripple sought to interrogate William Hinman, former director of the SEC’s Corporate Finance Division, who made incriminating statements about Ethereum.

While Hinman stated that he did not consider Ethereum a security, the SEC maintained that it was Hinman’s opinion, not the agency’s.

The SEC email chain

Ripple then discovered an email chain between the SEC and a third party that appeared to reflect the agency’s sentiment, with Ripple’s lawyers forcing the SEC to determine whether Hinman’s opinion was indeed its own, waiving any rights to the DPP – or if those opinions were that of the SEC, allowing a DPP case to be made. The DPP could also serve as evidence in the latter scenario.

SEC motion denied

Ripple hoped to hold a deposition where Hinman could be asked to apply his reasoning to XRP. The SEC filed a motion to oppose this testimony, but it was denied by Judge Netburn.

Ripple then argued that his case should be dismissed after SEC commissioners Hester Peirce and Roisman admitted that Coinschedule’s unregistered securities listings were due to the SEC’s reluctance to provide guidance for the industry.

Ripple then filed a motion to acquire SEC officials’ cryptocurrency trading history, which was denied by Judge Netburn.

Back to the DPP decision

In November 2021, Garlinghouse sounded upbeat in an interview with CNBC about the case.

“We are seeing very good progress despite a slow court process. Clearly we are seeing good questions asked by the judge. And I think the judge realizes that it’s not just about Ripple, this will have broader implications,” he said.

Looking at the ongoing arguments over the DPP decision, Ripple believe that Estabrook’s notes are unprotected and must be made public, while the SEC actively refuses to release the documents, citing the DPP’s protections.

As of press time, Ripple’s legal team has no plans to settle with the SEC. As with the Coinschedule and DPP decisions, precedents will continue to be set by this process.

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About the author

Archu

I am CBC, I am a Crypto expert and a part-time blogger. I usually write about how and where to buy crypto coins in legit ways.

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