More and more interesting threads are coming to us in the SEC vs Ripple case. This time, the company demanded that the SEC disclose what digital assets the Commission staff invested in. For what purpose? See for yourselves.
Show us what you have in your wallets!
Ripple recently filed a motion that is directed at forcing the US Securities and Exchange Commission (SEC) to disclose rules and information regarding its employees trading cryptocurrencies such as bitcoin, ethereum and XRP.
According to the request filed by attorney James K. Filan, Ripple wants the SEC to provide
“… anonymized documents reflecting pre-clearance trading decisions with respect to XRP, bitcoin, and ethereum, or alternatively, that this information be presented in aggregate form.”
In addition, the motion also mentions the documents regarding the SEC staff’s XRP holdings.
“Defendants also seek certifications regarding SEC staff XRP holdings – again, either with redacted personal information or in aggregate form. We have met and conferred with the SEC on this matter on July 8, July 15, August 18, and August 25, to no avail.”
Why are these documents so important to Ripple’s defense?
Ripple’s previous demands were denied by the SEC. Ripple asserted that “production of certain information” was integral to the defendants’ understanding of the SEC’s rules regarding digital assets and whether the SEC allowed its employees to trade the subject of the litigation, XRP.
Earlier in June, the court granted Ripple’s motion to compel the SEC to develop a trading policy for digital assets. The SEC drafted the policy on January 19, 2018, titled “Ethics Guidance Regarding Digital Assets.” Ripple noted that until January 19, 2018. The SEC did not consider digital assets to be securities, and thus its employees could “buy, sell, and transecho XRP without any restrictions from the SEC.“
Defendants also stated that:
“This evidence provides strong support for the defense position in this case and undermines the SEC’s claims. Specifically, the now-confirmed fact that the SEC itself did not restrict its employees from selling or buying XRP, despite years of regulation against its employees engaging in securities transactions without prior clearance, indicates that the SEC did not believe – at least prior to 2018 – that XRP sales and offerings were securities-based transactions.”
Moreover, although the SEC maintained a “Prohibited Holdings” list for securities, BTC, ETH and XRP never appeared on that list. “The watch list” created by the SEC to identify assets that are subject to individual review rather than a blanket ban did not include XRP until after April 13, 2018.
This meant that “any SEC staff transactions in XRP after April 13, 2018 were evaluated on a case-by-case basis – again, in the pre-clearance process.” Ripple representatives said that the SEC refused to produce this key information for the case, which is why they are now seeking that the Commission must produce these documents at the Court’s request.
The latter, in turn, has given the SEC until September 3 to respond to the request.