As we reported last week, Ripple Labs had filed a lawsuit to force the SEC to disclose the digital currency holdings of its employees. However, the Securities and Exchanges Commission refuses to disclose Bitcoin, ETH or XRP holdings and trading. Which was actually to be expected.
SEC does not disclose anything
As has now become known, the Securities and Exchanges Commission refuses to disclose its holdings of BTC, XRP and ETH. Pascal Guerrier, Trail Attorney at the SEC in the Division of Enforcement commented on this in a court filing:
Defendants’ request falls far short of the ‘low relevance’ that the court considered when it directed the SEC to issue the Ethics Adviser’s guidance on digital assets, and constitutes an unwarranted intrusion into the private financial affairs of SEC employees, even on an aggregate basis.
Previously, Ripple Labs had filed a lawsuit on the equitable defense that the SEC should disclose these holdings. The court agreed to do so as well. The issue was whether the employees should have known that XRP is or was a security.
The SEC, however, commented that the employees’ data would only be collected for the purpose of seeing if ethics guidelines were being followed. However, this ethics clearing would have nothing to do with whether or not XRP was a security.
Moreover, Congress had decided that trading should be confidential. Even though it is still not clear why there should be no transparency. Mainly also because it is to prevent insider trading. At the same time, the SEC is provided with reams of confidential information precisely because they oversee a $100 trillion market. Why then shouldn’t the staff also reveal what holdings they have of digital assets.
Guerrier attempts to explain
Guerrier attempts to explain why employees don’t have to disclose these holdings. Here’s how he commented.
The SEC also provided additional information (1) that Bitcoin, Ether, and XRP did not appear on the SEC’s list of prohibited holdings and (2) that Bitcoin and Ether never appeared on the Watch List and that XRP first appeared in April 13, 2018.
Further, it is also said by the SEC that the L.is of prohibited holdings applies to companies such as brokers. Employees, on the other hand, would not be covered. In addition, the watch list would apply to assets that are not subject to a preliminary investigation. To that end, the SEC also said:
An employee may not trade in securities related to that company if it is ‘under investigation’.
To this end, a distinction must also be made. A bitcoin ETF or ETN is a security. Bitcoin, on the other hand, is not a security. Even if Bitcoin is on the watch list, employees are not prohibited from trading BTC directly. That said, it is especially important to know if there was a trade in XRP at the SEC. Because that answer can be crucial to the complete case.
So, if there was trading in XRP after April 13, 2018, it’s important to clarify why SEC employees are trading in illegal securities. After all, that’s what the SEC calls XRP. Further, no one should be trading illegal securities and then subsequently enforcing that the security is indeed illegal. This is definitely a conflict of interest that is of very great importance.
Why does the SEC want to hide the data?
Why the SEC wants to conceal this data is not entirely clear. Because neither names of the employees nor how many XRP they have are revealed in the process. Malicious tongues claim that they probably already know that the SEC employees own quite a bit of XRP.
Thus, the Securities and Exchanges Commission would be putting itself on the line. In the next few days, it will become clear how things will proceed in this dispute. We will, of course, report on it.
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