Denied: Ripple’s request for documents on SEC’s ‘trading policies governing digital assets’

In what seemed like an apparent win for the United States Securities and Exchange Commission [SEC], Ripple‘s request for documents detailing the watchdogs’ “trading policies governing digital assets” was denied by Judge Sarah Netburn.

As per the ruling provided by attorney James K. Filan, the U.S. magistrate judge declined to grant the defendants access to documents that would prove whether SEC employees were carrying out transactions in Bitcoin, Ether, or XRP, as it was more likely to “cause confusion” than provide any relevant findings.

The regulator had previously been ordered by the court to present its crypto trading policies. Moreover, at the time, the crypto firm had contended that when its representatives had met with the SEC counsel last month, the latter had stated that SEC employees were barred from trading in XRP, since formal investigation against Ripple began in 2019.

Although, Ripple maintained that SEC did not produce any formal documentary evidence supporting their claim. Additionally, Judge Netburn’s analysis in the denied motion summarized the firm’s request as,

“Defendants argue that individual trading decisions will, at a minimum, expose the lack of
clarity regarding XRP’s status and whether the SEC believed XRP to be a security. Such
evidence arguably would undermine the SEC’s allegations that the Individual Defendants acted recklessly and would bolster the Defendants’ fair notice defense.”

Judge Netburn maintained that such an argument did not seem to be pertinent to the case, since,

“Defendants have not shown that such individual trading decisions bear on the issues in this case. Although the SEC’s policies (or absence of policies) may provide relevant evidence related to fair notice or recklessness, how an Ethics Counsel viewed a trading decision is more likely to cause confusion or create collateral litigation disputes.”

In addition to this, Netburn also noted that SEC employees’ financial conduct disclosures were protected under the Privacy Act, and Ripple was yet to provide proof that suspending these statutory protections would make a material difference to the case.

In his tweet regarding the recent decision, Attorney, James K. Filan, also noted that,

“The Court directed the SEC to provide Defendants any documentation supporting SEC counsel’s statement during the August 25, 2021 meet and confer that, after the formal order of investigation was issued as to Ripple on March 9, 2019, SEC employees could no longer trade XRP.”

While the SEC’s individual trading records might be out of bounds for Ripple now, this recent motion reaffirmed that the watchdog must provide documentation that would prove its claims that agency employees were barred from trading XRP in 2019. Even as the SEC seemed to have won this round in the fight, the war between the two is far from being over.