Judge Sides with Ripple in Dispute with SEC
A big victory for Ripple Labs was that the Securities and Exchange Commission (SEC) was denied a petition to conceal draft documents of former director William Hinman about a 2018 speech in which he infamously stated that Ethereum is not a security.
Judge Requested SEC Documents as Part of Ripple Dispute
U.S. Magistrate Judge Sarah Netburn, in her official statement published on Tuesday, said that the SEC is making legally immoral attempts to prevent the draft speeches from falling into the hands of the court, so as not to lose the battle, and that, despite all the efforts of the SEC, they must be submitted.
The Securities and Exchange Commission used two very different arguments not to disclose the drafts of Hinman's speech. Firstly, this is not a reflection of the views or methodology of the cryptocurrency regulatory agency. Secondly, Hinman requested and received the advice of the Securities and Exchange Commission in drafting the speech, which was apparently used by lawyers as a last attempt to protect the project on the basis of attorney-client confidentiality.
Judge Netburn rejected these attempts. The judge accused the SEC of hypocrisy and serving its own interests by complying with the law.
"Hypocrisy is, on the one hand, to prove to the court that the speech has nothing to do with the market's understanding of how and whether the SEC will regulate cryptocurrency, and on the other hand, that Hinman applied and received legal advice from an SEC adviser when drafting his speech suggests that the SEC takes its position in in the judicial process to achieve the desired goal, and not because of loyalty to the law," her statement says.
For those who don't know yet, the SEC first sued Ripple Labs back in 2020. She claimed that top managers Brad Garlinghouse and Christian Larsen knowingly sold unregistered securities through Ripple tokens (XRP).
Ripple objected, claiming that Hinman's speech laid the foundation for the assumption that cryptocurrencies are not securities. The Securities and Exchange Commission did everything possible to ensure that the draft documents of the speech were not submitted to the court. The litigation has attracted the attention of the entire crypto community - a future decision may create a precedent.
Hinman's speech may stay out of court
The essence of the debate surrounding Hinman's draft speech within the framework of attorney-client confidentiality is not whether Hinman can be considered a "client" of SEC lawyers - he can be, and both sides recognize this.
The stumbling block, as Judge Netburn points out in his opinion letter, is "whether a government employee can be a client when the issue on which the employee seeks advice is ultimately not an agency matter."
Ripple's lawyers argued that Hinman's speech is not considered legal advice, but "external activity." SEC lawyers responded that Hinman's speech was supposed to be an "official duty," and therefore he was a client in this context - staff advice would not have been available to Hinman if he had not been an employee, but a private individual.
Ultimately, Justice Netburn concluded that Hinman's draft speeches "did not pursue the primary purpose of requesting or providing legal advice," but rather sought political advice and guidance. This difference means that the SEC cannot require attorney-client confidentiality to conceal documents from the court.
"Political advice - for example, it is a good or bad idea to make a specific public statement as a public figure - or communication advice - for example, whether the statement is a direct communication with the position of the agency - is not protected legal advice, even when it is offered by lawyers," she wrote.
However, it looks like the SEC may appeal Judge Netburn's decision. It is unclear whether the SEC will do this, but in its current form, the SEC must prepare all drafts of Hinman's speech.
Author: Elvir, analyst Сoin-signal.com Club
https://coin-signal.com/cryptonews/judge-sides-with-ripple-in-dispute-with-sec/
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