- Judge Analisa Torres has ordered the two warring factions – the SEC and Ripple – to unseal some documents that could make or break the case.
- The sealed documents will finally reveal who has been lying in court between the SEC and Ripple regarding whether the latter knew it was selling a security.
Did Ripple and its two executives Chris Larsen and Brad Garlinghouse know that XRP was a security as they sold billions of dollars worth of the token? This will be the question to which we might finally learn the conclusive answer in a week’s time.
The U.S Securities and Exchange Commission has been in a long and messy legal battle with Ripple since December 2020. It accuses the San Francisco company, and its two key executives, of selling unregistered securities knowingly. Ripple has fought back, claiming that at no time did the SEC issue guidance that would indicate XRP was a security.
But now, the focus has turned. Rather than scrutinizing the SEC’s failure to give guidance, it’s now on whether the third-party legal firms that Ripple consulted all those years ago told the company that XRP was a security.
Last week, Judge Analisa Torres of the U.S District Court in Manhattan ruled that Ripple must unseal the documents showing what legal advice it received regarding the legality of XRP tokens.
Why Feb 17 is a ‘make or break’ day
Back in 2012, when Ripple launched, Chris Larsen (who was the CEO then) sought advice from a law firm on the status of XRP. This law firm, whose name has remained undisclosed all this while, submitted two memos to Ripple in which it had analyzed all the legal issues that could arise from the new token. All this has been public knowledge.
What has been the bone of contention was the content of the memos. According to the SEC, Ripple was advised that XRP is a security but chose to march on with its tokens plans regardless.
Chris and Ripple dispute this allegation. They claim that any reasonable mind would have concluded that XRP isn’t a security under federal laws from the memos they received.
However, despite asserting that the memos exonerate them, Ripple and its execs don’t want them to be unsealed. In fact, they have fought hard to keep what’s in these memos away from the SEC and the general public. In one filing towards this, the two claimed that what’s in the memos is competitively sensitive and additionally, doesn’t affect the case in a significant manner.
Judge Torres disagrees with Ripple. If the memos prove your innocence, and you keep referencing them in court, then they must be relevant to the case, she argued (in a nutshell).
By February 17, we will be able to judge for ourselves who has been lying between the SEC and Ripple. The regulator is intent on accessing these memos as they would prove that Ripple knew it was committing a crime but went on about its businesses regardless. The memos would also decimate Ripple’s fair notice defense.