Ripple has filed a motion seeking to compel the U.S. Securities and Exchange Commission (SEC) to reveal if its employees held any XRP or other digital currencies. The company is seeking to lay its hands on the regulator’s internal trading policies as part of its lack of fair notice and regulatory clarity defense.
In its motion, filed in New York, the San Francisco-based firm claimed that the SEC has refused to produce certain information necessary to its understanding of the regulator’s internal digital asset trading policies. It wants the SEC to reveal if it allowed its staffers to hold XRP, its native digital currency which is at the center of the securities violation lawsuit.
#XRPCommunity #SECGov v. #Ripple #XRP Ripple defendants file Motion to Compel the SEC to produce documents showing whether SEC employees were permitted to trade XRP and other digital assets. https://t.co/WPLmYwk1SL
— James K. Filan 🇺🇸🇮🇪96k+ (beware of imposters) (@FilanLaw) August 27, 2021
Ripple has been fighting to access the SEC’s internal trading policies for months now. In June, Judge Sarah Netburn ruled that the regulator should produce these policies to Ripple. And the SEC did produce some documents, Ripple’s legal team admits. However, this is not enough.
The SEC produced the “Ethics Guidance Regarding Digital Assets” which showed that up until January 2018, it hadn’t imposed any restrictions on holding digital assets for its employees. This, according to Ripple, “is consistent with the SEC not having viewed digital assets as securities.”
“At all times from 2013 until at least January 19, 2018, SEC employees were free to buy, sell and hold XRP without any restriction by the SEC,” it stated. “Likewise, it supports Ripple’s fair notice defense: that the SEC itself had not concluded that sales and offers of XRP were transactions in securities is evidence that market participants lacked the requisite fair notice that XRP later would be deemed a security.”
This document shows that the SEC began to extend its securities policy to digital assets in 2018. However, according to Ripple, it left a lot to interpretation as it didn’t claim all digital assets are securities. Rather, it left this judgment to its preclearance, which would consider the digital assets on a case-by-case basis.
“As a result, Defendants cannot know whether the SEC actually prohibited or allowed transactions in XRP, bitcoin or Ether without the preclearance documents, which the SEC has refused to provide,” it states.
Aside from pleading lack of fair notice, Ripple has also been attempting to have the SEC reveal whether it exempted Ether and BTC from being securities, as former director Bill Hinman once famously claimed. Its defense along this line is that “Ether is not a security, and XRP is like Ether; thus XRP is not a security.”
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