The U.S. Securities and Exchange Commission (SEC) is losing a prominent argument in its lawsuit against Ripple Labs.
Federal Judge Sarah Netburn denied the SEC’s attempt to not provide internal documents relating to former SEC Director William Hinman, who made a speech in 2018 stating that Ethereum (ETH) was not a security.
Netburn first ordered the SEC to produce emails relating to the speech in January, but the SEC challenged the order. Netburn struck down the challenge and ordered the SEC to hand over the requested drafts and emails in April, though she did grant a clarification.
The SEC then requested more time to file an objection against Netburn’s decision to overrule their challenge.
The regulator claimed attorney-client privilege protected the Hinman documents. However, Netburn shot down that line of reasoning in her most recent order.
“The SEC has distanced itself from the Speech to avoid discovery and sought to preclude Hinman’s deposition on the grounds that whatever he said in the Speech, it had nothing to do with the SEC’s position.
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.”
Jeremy Hogan, a crypto legal expert who’s been closely monitoring the case, says the SEC has announced it intends to appeal Netburn’s latest decision.
The SEC has already said it intends to appeal this Order so I think we should expect it.
— Jeremy Hogan (@attorneyjeremy1) July 12, 2022
The SEC first sued Ripple in late 2020, alleging the payments firm sold XRP as an unregistered security.