- The SEC has been accused of “hypocrisy” by the magistrate judge in its case against Ripple Labs
- The judge ruled that emails and documents relating to a former SEC chair regarding crypto securities was admissible as evidence
- She also accused the SEC of not acting out of “a faithful allegiance to the law”
The judge in the Securities and Exchange Commission’s (SEC) case against Ripple Labs has accused the agency of hypocrisy and said that it is not acting out of “faithful allegiance to the law”. The SEC launched legal proceedings against Ripple Labs at the end of 2020, accusing the company of selling an unlicensed security, and the case has taken many twists and turns already. The latest comes as a result of the SEC’s attempt to have certain testimony excluded due to client-attorney privilege. The judge denied this however, and tore a strip off the SEC in the process.
Former SEC Chair Testimony Crucial to Ripple’s Argument
The testimony at heart concerns the content of a 2018 speech made by former SEC Chief William Hinman regarding the status of cryptocurrencies as securities, but more importantly emails and other documents surrounding it. Ripple believed that this evidence could change the trajectory of the case in their favour and therefore wanted them included in evidence.
The SEC, however, contended that the emails and documents were covered by client-attorney privilege and so could not be used in evidence, which Ripple said was an attempt to “shield the identities and opinions of its experts from any public scrutiny.”
Judge Sides With Ripple
Magistrate Judge Sarah Netburn agreed with Ripple, and let the SEC know in no uncertain terms what she thought of their arguments:
The hypocrisy in arguing to the Court, on the one hand, that the Speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency, and on the other hand, that Hinman sought and obtained legal advice from SEC counsel in drafting his Speech suggests that the SEC is adopting its litigation positions to further its desired goal, and not out of a faithful allegiance to the law.
This excoriation will please Ripple and cryptocurrency firms in general, who have long argued that the SEC’s approach is underhand and inconsistent, something that crypto lawyer Jake chervinksy commented on when the ruling was passed:
This is strong language from Judge Netburn. It’s ordinary for enforcement agencies to lose motions in court, but quite unusual for a judge to call them out for unseemly litigation tactics. It’s sadly consistent with reports from across the industry of unfair treatment by the SEC. https://t.co/Khq8iElB0b
— Jake Chervinsky (@jchervinsky) July 14, 2022
Sadly there is no end in sight for the case, with Ripple Labs’ general counsel Stuart Alderoty saying in a May tweet that “It now looks like a resolution will come in 2023.”
