XRP lawsuit: Has the SEC bitten off more than it can chew?

Just when it seemed like the SEC-Ripple lawsuit might be heading towards settlement talks, Judge Netburn denied the regulatory body’s access to the blockchain firm’s legal advice documents a couple of days back. The legal battle has become even more heated-up and intense since. 

In what is the latest development in the same, the SEC has requested the court extend its deadlines for both fact and expert discovery by a period of 60 days. The plaintiff justified the same by arguing that a 60-day extension would be unlikely to delay the trial. 

As per the initial dates, the fact discovery was scheduled to close on 2 June, while the expert discovery was set to conclude on 16 August. The SEC, in its request letter

In a nutshell, the SEC contended that Ripple had difficulty in producing responsive documents on time, and a few documents, already in its possession, were “incomplete.” The agency further wants Ripple to produce additional documents and has also requested the court to depose additional witnesses. The same requests are still pending before Judge Netburn, with the agency using the same as additional reasons for the extension. 

The plaintiff, additionally, pin-pointed that both Brad Garlinghouse and Chris Larsen had raised a number of concerns with respect to the agency’s review and production of internal documents. According to the SEC, they need additional time to address Ripple’s requests to seal and claw back documents under the protective order. 

It’s worth noting here that the defendants, however, expressed their lack of consent with respect to the extension and contended that the SEC had sufficient time to investigate the matter before filing the suit. The defendants also asserted that they want to head towards a summary judgment at the earliest. 

In retaliation, the SEC responded, 

“The first is not a reason to deny the SEC’s request and Ripple suffers no cognisable prejudice from a 60-day discovery extension… The SEC needs additional time to develop the factual record in this matter anticipation of summary judgement and trial.”

Citing a few other cases as precedent, the SEC also argued that courts usually extended discovery deadlines for movants who have been “diligent” in attempting to meet existing deadlines.

The regulatory body further clarified that it had already conducted the discovery, but required more time only to look into the additional discovery sought. Clinging onto the principles of fairness and efficiency, the SEC added, 

“The most fair and efficient way to address the large volume of discovery in this matter, including depositions, is to extend the time within which parties can complete fact discovery by 60 days and apply a corresponding extension to the extension to the expert discovery period.”

Needless to say, reactions to the SEC’s request were vocal. Attorney James K. Filan, for instance, claimed, 

“In my opinion, it means that the enforcement action was filed before the investigation was even completed. Which to me means the SEC is still scrambling to put its case together… The motion makes the SEC look bad.”

He added,

“I don’t think Judge Netburn will be particularly impressed. The SEC’s motion completely disrespects Judge Netburn’s strong and efficient handling of the case and her fast resolution of disputes.”

Jeremy Hogan also shared similar views, tweeting,

If the SEC’s request gets approved, the period for fact discovery would end on 31 August and the period for expert discovery would conclude on 15 October.