SEC v. Ripple – How did agency’s ‘Estabrook Notes’ win affect XRP

Ripple Labs, the San Francisco-based fintech firm, has maintained its offensive attacks against the SEC amidst the ongoing lawsuit. However, it might be time for its supporters to put some hard brakes on that “winning” sentiment. 

Ripple, via defendant Brad Garlinghouse, had filed a response to the SEC’s opposition to the motion to compel the production of the “Estabrook Notes.” As per the 28 February filing, the defendant sought disclosure of the notes of a 2018 meeting between former SEC Commissioner Elad Roisman and Ripple’s CEO. This, mainly to prove that Ripple executives made efforts to stay compliant with US securities law.

Alas, the SEC cited “privilege.”

So, which one is it?

Well, it’s that latter that made headlines today. On 20 April, Judge Netburn denied Garlinghouse’s Motion to Compel Production of the Estabrook notes. The Court stated that “Estabrook’s notes are no different from the notes the Court previously found to be protected by the privilege.”

Attorney James Filan shed light on this development by tweeting,

#XRPCommunity #SECGov v. #Ripple #XRP BREAKING: Judge Netburn denies Garlinghouse's Motion to Compel Production of the Estabrook notes. The Court states that "Estabrook’s notes are no different from the notes the Court previously found to be protected by the privilege." pic.twitter.com/m4gI1mj1uq

— James K. Filan ????90k+ (beware of imposters) (@FilanLaw) April 19, 2022

The filing noted,

“The SEC’s fact-gathering from third parties is not an inherently privileged activity. But after reviewing Estabrook’s notes, I find that they could reveal to Garlinghouse the SEC’s internal thought processes during his meeting with Commissioner Roisman. The privilege applies.”

Neither Estabrook nor Commissioner Roisman is involved in the SEC’s investigation of Ripple, the filing asserted.

How did the community react? 

Well, one word- ‘Confused.’

Different XRP Community members had raised clarifying questions to get some insight into this situation. One entity asked the following – ‘So notes from a meeting that brad actually took part in are privileged? I’m no lawyer but how in the name of god does that make any sense?’

Soon enough, another attorney tried to make some sense of this situation. Jeremy Hogan, partner at Hogan and Hogan, asserted –

Why fight this uphill battle?

1. Because Ripple wasn't 100% sure what was in those notes and so it was a chance worth taking.

2. These are the notes that the SEC "found" after the fact and it makes the SEC look sloppy/bad and you always want to highlight that to the Judge! 🙂

— Jeremy Hogan (@attorneyjeremy1) April 19, 2022

Whatever the case, Hogan would expect the Defendant to bounce back. He further added,

“The idea of “uncontroverted” evidence is very very powerful in the law. It’s evidence that MUST be believed by the Court. So unless the SEC comes up with evidence to the contrary, whatever Garlinghouse says about that conversation IS what took place. No questions asked.”

XRP senses trouble?

Did the altcoin sense this or instead, prepare to apply brakes to its trajectory? Well, looks like the latter.

XRP did lose around 2% in just 24 hours as it traded around the $0.76-mark. In fact, it recorded a quarterly trading volume that was three times lower than the volume recorded in the first quarter of 2021.

The trading volume of XRP in the first quarter of 2022 was approximately $203.94 billion. This was a 68% dip in trading volume, when compared to figures for the same period in 2021. In the first quarter of 2021, the trading volume of XRP was around $640.70 billion.