A federal judge is striking down the U.S. Securities and Exchange Commission (SEC) request to withhold certain internal email conversations from its lawsuit against Ripple.
Federal Judge Sarah Netburn ordered the SEC to hand over the requested drafts and emails relating to a 2018 speech from William Hinman, the former director of the Commission’s Division of Corporate Finance.
In the speech, Hinman said Ethereum (ETH) was not a security.
The SEC sued Ripple in December 2020, alleging that the company sold XRP as an unregistered security, a position the regulator maintains to this day.
The regulator also filed individual charges against Ripple CEO Brad Garlinghouse and the company’s co-founder, Chris Larsen.
Netburn first ordered the SEC to produce the emails in January, but the SEC challenged the order.
While Netburn denied the SEC’s motion to reconsider the order, she did grant a clarification.
Explains the judge,
“As discussed above, the question is whether any of the communications about, edits to, or comments on drafts of the Speech were not just related to specific deliberations facing the agency but comprised an ‘essential link’ in those deliberations. Having reviewed the documents, I find that, in general, agency staff communications about edits to the Speech—and the edits themselves—were not part of deliberations about how to communicate agency policy.
However, to the extent that there exist communications between staff discussing the Speech in the context of how it implicates other, separate agency deliberations—not deliberations about the content of the speech—the SEC may seek leave to redact those communications from its production. To give the SEC some guidance, comment 12 on page 6 of the Speech draft in Document J, which was submitted for in camera review, is the type of communication contemplated.”
The “Document J” Judge Netburn mentions is not publicly available.
Attorney and crypto legal expert Jeremy Hogan says on Twitter that the clarification is “a little concerning.”
“My concern: it’s those parts of the emails that are most damaging to the SEC. How will we know? If the SEC appeals up to Judge Torres, they are in trouble.”
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