XRP lawsuit: SEC scores point after Court orders Ripple to produce more Slack texts

In what is the latest development in the legal battle between the United States SEC and Ripple Labs, the former seems to have finally scored a minor victory.

Judge Sarah Netburn has ordered Ripple to produce more Slack messages from a wider group of custodians. The SEC had previously filed a petition demanding Ripple employees hand over their Slack communications. According to the SEC’s estimates, there are over a million messages to be assessed since Ripple employees frequently communicated through Slack.

While the SEC has claimed that the defendants agreed to produce this information at the beginning of the discovery phase, they later termed this exercise an “extensive and costly fishing expedition” that will take up significant time and resources.

Because Ripple found this information “neither critical nor uniquely relevant,” the regulatory body had previously demanded an emergency conference on the matter. However, Judge Netburn felt no need for the same and issued the recent order as text-only.

According to the text, Ripple now has to produce Slack messages from 22 custodians listed out by the SEC. The order further ruled that Slack messages are relevant to both the parties and Ripple’s perceived burden is outweighed by its previous agreement to produce the same. It further read,

“The Slack messages sought are relevant to the parties’ claims and defenses and proportional to the needs of the case. Any burden to Ripple is outweighed by its previous agreement to produce the relevant Slack messages, the relative resources of the parties, and the amount in controversy.”

In the past, Ripple had argued that it would be an “undue burden” if it produced terabytes of data pertaining to those Slack messages. This was in response to the SEC’s request seeking a pre-motion conference. In the same, the agency had that Ripple’s refusal comes from its own “mistakes in gathering that data.” A few Slack messages, however, did offer the commission “critically important information.”

During a conference call held on 31 August regarding the SEC’s privilege dispute, the judge also ordered the regulatory watchdog to produce internal documents regarding discussions over the nature of XRP and ETH, for which she will hold an in-camera review.

Many in the crypto-community have pointed out that this represents the unbiasedness of Judge Netburn. Others have speculated that this discovery wouldn’t amount to much since anything the employees might have said would be deemed irrelevant if they were unaware about XRP being a security or not.

In another development related to the case, Judge Netburn also denied the motion filed by the Chamber of Digital Commerce’s counsel to appear as ‘amicus curiae’, or ‘friend of the court.’ The in-text order observed that “the attorney did not represent a movant or party in the case” and hence, the motion was being removed from the case docket.

The counsel for the Chamber filed a motion to appear in the case as a friend of the court, but Judge Netburn has her own local rules to be followed, starting with a Motion for Leave. This was not a rejection on merits, only on procedure.

— CryptoLaw (@CryptoLawUS) September 1, 2021