In the closely watched SEC v. Ripple Labs, No. 20-cv-10382 (S.D.N.Y.), U.S. Magistrate Judge Sarah Netburn issued two discovery rulings in favor of the Defendants in just the past week, altering the landscape of the case. First, in a ruling issued from the bench on April 6 (subscription required) Judge Netburn granted the Defendants' motion to compel the SEC to produce its internal deliberations regarding XRP's status as a security, which is the central issue in the case. The ruling carved out staff-to-staff communications, but requires production of internal memoranda and meeting minutes. Although the SEC may try to limit or reverse the ruling through additional motions practice or an appeal, any production of this information would be valuable not just to the Defendants, but to the many digital asset issuers interested in the SEC enforcement staff's views on classifying digital assets as securities.
In the second ruling, issued via a written order on April 12 (subscription required), Judge Netburn denied the SEC's request for eight years' of the individual Defendants' financial information. The individual Defendants previously agreed to produce a complete record of their sales and transfers of XRP, which Judge Netburn held was sufficient given the current posture of the case. The additional financial information sought by the SEC was overly broad and relevant only to potential issues that have not yet been alleged or established (such as the Defendants potentially hiding some of their XRP in anonymized wallets), according to the court.
Senator Warren's Letter to SEC Chair Gensler is a Wake-Up Call
Blockchain Law Center | (07/15/2021)
Cornerstone Research Report Shows SEC Brought 75 Crypto-Related Actions in 7.5 Years
Blockchain Law Center | (05/17/2021)
Crypto Investors Withdraw Class Action Suits Against Cryptocurrency Companies
Blockchain Law Center | (05/10/2021)
SEC's Hester Peirce Speaks on Howey, NFTs, and her Safe Harbor Proposal
Blockchain Law Center | (03/31/2021)
New Report By Citi Suggests that Bitcoin is at the “Tipping Point” of Mainstream Acceptance
Blockchain Law Center | (03/25/2021)
About Blockchain Law Center
Blockchain technology utilizes a distributed digital ledger to record and track information, and can be leveraged to gain transparency and certainty in transactions ranging from cryptocurrency to supply chain tracking. This blog provides information on the legal developments surrounding implementation of blockchain technology, with an initial focus on the financial services sector.