- Ripple Labs has been granted access to the Securities & Exchange Commission’s internal communication.
- The regulator previously stated that Bitcoin and Ethereum were not deemed securities.
- The judge in the case said that this discovery hearing was a “high-stakes” win for Ripple.
Ripple Labs won in a discovery hearing that would force the Securities & Exchange Commission (SEC) to hand over its internal documents on Bitcoin and Ethereum. The XRP price has since risen 23.4% in the past 24 hours, trading above $1 at the time of writing.
SEC to hand over documents on Bitcoin and Ethereum
The SEC accused Ripple Labs and its executives of offering an unregistered security — XRP — in December 2020. The securities regulator alleged in the $1.3 billion lawsuit that Ripple illegally earned over $600 million by selling the digital currency.
In a previous discovery hearing, US District Court Judge Sarah Netburn dropped a bombshell statement, saying that her understanding of XRP is not only that it has value but also utility.
Former SEC Chairman Jay Clayton and former Director of Enforcement Willian Hinman both claimed that the regulator does not consider the two largest cryptocurrencies to be securities. The SEC has not detailed how it has come to this conclusion.
Ripple Labs and its co-defendants, CEO Brad Garlinghouse and Executive Chairman Chris Larsen, filed a motion on March 15 to request the SEC to bring forward documents regarding the regulator’s internal communication on Bitcoin and Ethereum.
The securities regulator stated that Bitcoin and Ethereum were not securities offerings, US District Court Judge Sarah Netburn reiterated. She added:
For almost a decade, the SEC watched as XRP grew and developed, all the while issuing no formal guidance that its sales may be illegal.
Ripple is seeking to find documents where XRP is mentioned by the SEC as a “virtual currency,” similar to Bitcoin and Ethereum. The internal communication documents may also show the SEC’s criteria for determining which digital assets are and are not deemed securities, which could help the blockchain firm make its case.
Judge Netburn said it was a “high-stakes” discovery win for Ripple, as she ruled in favor of the defendant. She added that documents such as meeting minutes and internal memos “expressing the agency’s interpretation or views” on cryptos would be included in the order, however, leaving out internal staff emails.
Why are Bitcoin and Ether relevant?
Attorney John Deaton, who led the motion to intervene in the SEC v. Ripple case, highlighted the importance of the decision a prosecutor makes at the beginning of who to charge and what to charge. Clayton favored going after the individual executives of Ripple, not just the company.
Deaton, who is familiar with the case, figured that if the SEC only sued Ripple, it would only be a strict liability case — where the securities regulator would only need to prove that XRP was a security when Ripple sold it.
However, since the SEC went after the two executives, the regulator needs to prove that Garlinghouse and Larsen “knew or recklessly disregarded that Ripple’s sales of XRP required registration.”
Bitcoin and Ethereum are further relevant to the case as the former Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo authored an article stating that XRP is not a security and that it is a commodity. Current CFTC chairman Heath Tarbert said in January 2020 that:
We’ve been very clear on Bitcoin: Bitcoin is a commodity. We haven’t said anything about Ether — until now. It is my view as chairman of the CFTC that Ether is a commodity.
Deaton said, “If the former CFTC Chairman stated affirmatively that XRP is a commodity and the then-current CFTC Chairman said officially ETH is a commodity, it’s certainly reasonable to assume that XRP is not a security.”
He further claimed that Clayton — who filed the lawsuit against Ripple Labs on his last day — and his crew were “arrogant bureaucratic bullies” who wanted to either “send a message” or did so for other personal reasons.
Ripple issued a subpoena to Clayton at his new place of employment for any communications related to cryptocurrencies, not limited to Bitcoin, Ethereum and Ripple.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC declines as resistance emerges near all-time high
Bitcoin and Ethereum are approaching their key support levels, and a sustained close below these marks could lead to further declines.
TON set to launch synthetic Bitcoin to boost its DeFi solutions
TON revealed its plan on Thursday to launch a synthetic Bitcoin token on its blockchain, allowing users to trade, stake, and earn yield using BTC. Following the announcement, TON is down over 3%.
Maker Price Forecast: MKR could stage 40% rally
MakerDAO is up 2% on Thursday and could be set for a 40% rise in the coming weeks if it successfully maintains an extended move above the descending trendline of a falling wedge. On-chain data also supports the bullish outlook after a four-month-long decline.
USDT market cap crosses $120 billion as stablecoins continue their uptrend
The stablecoin market cap continued its uptrend in October, characterized by USDT reaching a $120 billion market cap, according to a CCData report on Thursday. This indicates that investors are preparing liquidity to fuel more demand.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.