Ripple achieved another procedural victory at the end of this week in its ongoing legal battle with the Securities and Exchange Commission, which sued the crypto payments firm in 2020 for the unregistered sale of $1.3 billion of XRP—a cryptocurrency originally created by the founders of Ripple.
On Thursday, a federal district judge canceled the SEC’s repeated attempts to prevent Ripple from accessing internal SEC emails related to a key speech regarding the regulatory status of competing cryptocurrency Ethereum. Ripple believes the emails will help his case and shed light on the ways the SEC has “chose two winners” in the crypto space, Bitcoin and Ethereum, while avoiding the rest.
Legal experts who spoke with decipherhowever, they had doubts about the significance of the ruling and the likelihood that it would increase Ripple’s chances of overcoming the SEC lawsuit.
a trial judge previously granted Expand access to those emails, which contextualize a 2018 speech in which former SEC senior official William Hinman stated that Ethereum was not a security because it was “sufficiently decentralized.” However, for months, the SEC attempted to withhold documents from Ripple’s attorney; yesterday’s cancellation has forced the agency to produce them now.
In the hours after the decision, the price of XRP jumped a little over 15%, at $0.49. Ripple’s supporters celebrated the ruling as a major victory not only for the company in its lawsuit against the SEC, but also for the crypto industry as a whole in its broader fight against government regulation.
This is why the cryptocurrency market should be thankful @Vibe is fighting this case. If you add up the legal fees that Ripple has paid to finally get a ruling from Judge Torres, it’s probably $2-3 million and they still don’t have the documents. Next step: SEC asks to certify or Mandamus. https://t.co/yXiUAoGNJA
— John E Deaton (216,000 followers, beware impostors) (@JohnEDeaton1) September 29, 2022
“What Ripple hopes to find [in these emails] it is irrefutable proof, a juicy quote, that four years ago the SEC said that Ethereum was not a security and here is the reasoning and if you apply that reasoning to XRP, it is not a security either”, Adam David Long, lawyer specializing in Web3, saying decipher.
But Long believes that even if such irrefutable proof exists, its relevance to the Ripple case is tangential at best.
“This will come down to what Ripple said and what people reasonably believed, when they bought [XRP]Long said. “And what somebody discussed internally at the SEC about a speech, I’d be surprised if that materially moves the case.”
Ironically, what further undermines the potential legal significance of those internal SEC correspondences is the language in Thursday’s ruling granting Ripple access to those emails.
The federal district judge overseeing the lawsuit ruled yesterday that Ripple was entitled to view the SEC emails in part because, at most, they would reveal Hinman’s personal views, and nothing related to “any form of agency position, decision or policy”.
“The reason Ripple got the documents may be a reason they don’t help their case,” said a law professor familiar with the matter. decipher.
Mike Handelsman, a partner at cryptocurrency law firm Kelman PLLC, similarly expressed skepticism about the potential relevance of the Hinman emails to the Ripple case.
“The bias on Hinman’s part in favor of ETH appears to be irrelevant to the ultimate issue in this case, namely whether XRP is a security,” Handelsman said. decipher.
However, if Handelsman believes that the Ripple community’s understanding of the meaning of this week’s ruling is flawed, that does not mean that he disagrees with its way of framing the stakes in the case.
“The industry needs Ripple to win,” said Handelsman. “If the SEC is successful in this case, I expect the enforcement floodgates to open. If the SEC loses this case, it will be a huge setback for them and their ‘regulate through enforcement’ plan.”