Although Ripple Labs has filed a motion to dismiss the Securities and Exchange Commission (SEC) lawsuit, the blockchain firm is faced with multiple challenges. Despite the judge’s ruling to allow discovery of SEC documents on Bitcoin, Ether, and XRP, the securities regulator may now have the edge over Ripple.
The ongoing $1.3 billion lawsuit filed by the financial watchdog in December last year has now taken a turn despite Ripple securing multiple small victories in the case. The SEC has pushed back on revealing documents on cryptocurrencies by denying possession of these materials.
Judge Sarah Netburn made a ruling in early April that at the time was viewed as boosting Ripple’s defense, saying that the SEC must disclose discussions on whether Bitcoin, Ether, and XRP are securities.
However, the judge has excluded the discovery of internal communications at the SEC. The securities regulator has now taken this ruling as a victory on its part. Judge Netburn said:
I am going to authorize discovery both as to exclusively Bitcoin or Ether communications as well as XRP communications between the SEC and third-parties. I am not including SEC-to-SEC internal communications in that ruling.
Former director of the SEC, William Hinman, cited the decentralization of both Bitcoin and Ethereum networks and stated that the two digital assets were not securities. Any discovery made where the SEC expressed equivalency between Bitcoin, Ether and XRP would be critical to Ripple’s defense.
According to an attorney familiar with the case, Jeremy Hogan said the judge’s ruling was a nuanced decision. Judge Netburn’s verdict on the discovery of communications only included SEC and third-party correspondence, but not internal documents. Hogan added that Ripple might get less than they were asking for. The attorney explained:
The Judge is going to tell the SEC to pull out an internal memorandum regarding the security-designation status of BTC and ETH and XRP and disclose them. She will force them to disclose more than they want (which is apparently “nothing”), but less than Ripple is asking for.
Attorney Hogan further believes that the judge will rule on the matter soon while the two parties continue to be in a state of disagreement.