Ripple has scored another win in its ongoing legal battle against the United States Securities and Exchange Commission as the court has denied the SEC access to Ripple’s legal advice. Magistrate Judge, Sarah Netburn of the District Court for the Southern District of New York, ruled Sunday to deny the SEC’s motion to compel Ripple to produce memos discussing XRP sales with the firm’s lawyers.
The Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs CEO, Brad Garlinghouse and Executive Chairman, Chris Larsen in December 2020, alleging that XRP was a $1.3 billion unregistered securities offering. So far, Ripple has managed to achieve a series of wins which include winning access to internal SEC discussion history regarding cryptocurrencies in April and denying the SEC the disclosure of the financial records of Garlinghouse and Larsen.
In the latest ruling, Netburn referred to the attorney-client privilege that is meant to “encourage full and frank communication between attorneys and their clients and thereby, promote broader public interests in the observance of law and administration of justice.” The judge stated that Ripple has not waived its attorney-client privilege despite defendants being able to waive it if the need arises.
The ruling also pays attention to the rule of fair notice, which requires the courts to construe ambiguous criminal statutes in favour of the defendant. In using this defense, Ripple claims that the SEC failed to provide market participants with fair notice that the regulator considered XRP a security. The Judge stated, “In support, it cites to the SEC’s eight-year delay in pursuing enforcement action against Ripple for its alleged securities violations, even after XRP was listed on over 200 cryptocurrency exchanges, billions of dollars of XRP sales transactions had taken place, and Ripple had entered a settlement with the U.S. Department of Justice and FinCEN that described XRP as a ‘convertible virtual currency.”
What this means
This means Ripple is on the winning side of their lawsuit and a settlement or even a complete dismissal can be expected sooner rather than later. This is because the CEO of ripple, Brad Garlinghouse, confirmed Ripple’s plans to go public after the firm resolves its case with the SEC which means the firm will also be looking for ways to settle the ongoing case as quickly as possible to focus on their plans to go public. Ripple’s XRP is trading $1.01, up 16.30% in the last 24 hours.