Judge orders SEC to answer interrogatories as Ripple CEO accuses U.S. securities regulator of favoring Ethereum

Key Takeaways:

  • Judge Netburn passed order on two motions, one from Ripple and one from the SEC.
  • Ripple CEO claims the SEC’s partiality against Ripple helped Ethereum to grow.

NEW DELHI (CoinChapter.com) — Judge Sarah Netburn, presiding over the Ripple-SEC lawsuit, passed her judgment on two pending motions, one each from Ripple Labs and the prosecutors SEC. The judge granted and denied, in part, both the motions.

The motions in the judgment include Ripple’s motion to compel the SEC to provide clearer answers to Ripple’s interrogatories. The second motion is from the prosecution’s side, asking for a protective order to relieve the SEC of its obligation to respond to 29,947 separate requests for admission.

The Ripple interrogatories seek to clarify the SEC’s method of applying the Howey Test to XRP.

Meanwhile, Ripple CEO Brad Garlinghouse alleges that the SEC unfairly targeted his company, which led to Ethereum gaining an edge over Ripple. The Ripple boss was speaking at D.C. Fintech Week virtual conference on Oct. 21. The US SEC filed a lawsuit against Ripple in 2020, alleging XRP is unregistered security.

Judge Netburn’s Decision On Ripple’s Motions

Judge Sarah Netburn noted that the dispute over the application of the Howey test lies in the applied controlling standards. She said the SEC’s legal theory is not an excuse to avoid answering Defendant’s factual queries. Judge Netburn further said that Ripple’s is relevant and precise.

She elaborated that the interrogatory would clarify whether the SEC contends that the terms of any contract identified in Ripple’s Interrogatory No. 1 created an expectation of profits for XRP investors.

The judge also ordered the SEC to respond to Ripple’s Interrogatory No. 6, which deals with Bitcoin and Ethereum’s status in the eyes of the regulatory body. She asked the SEC to clarify whether Bitcoin and Ethereum are ‘securities within the meaning of Section 2 of the 1933 Securities Exchange Act.’

Also Read: 3 reasons why XRP looks poised to hit multi-month highs in Q4.

The SEC has opposed the interrogatory on the grounds of it being ‘vague and ambiguous.’ However, taking note that the SEC’s previous response was based on unsworn admissions, Judge Netburn ordered the regulatory body to supplement its response per Rule 33(b)(3).

Furthermore, regarding Ripple and XRP’s behavior under the Howey test, the judge stated that the parties’ disagreement ‘over the application of Howey and its progeny does not mean that Ripple’s interrogatory is irrelevant. Hence, Judge Netburn ordered the SEC to answer.

Additionally, regarding Ripple’s Interrogatories No. 17 and 19, the SEC’s opposition is based because the interrogatory is derived from an incorrect reading of the law. The regulatory body also stated that it supplemented its response by citing prior interrogatory responses.

Judge Sarah Netburn ruled in Ripple’s favor for both the interrogatories. As such, she ordered the SEC to amend and supplement its responses in compliance with Rule 33(b)(3).

However, Judge Netburn denied Chris Larsen’s motion regarding whether ‘the XRP Ledger was not fully functional before the start of the ongoing securities offering alleged in the Complain,’ according to SEC’s views.

The judge termed the interrogatory as being too vague. In addition, she ordered the parties to meet and confer ‘in good faith‘ to clarify the terms of Mr. Larsen’s Interrogatory No. 5.

“The Roughly 30,000 Requests From Ripple Is Theater”

Judge Sarah Netburn noted that Defendants served the SEC with three separate sets of requests for admission on the last day of fact discovery. The fourth set has 776 requests concerning Ripple’s fair notice defense, while the Fifth set contains 309 requests related to Defendant’s extra-territorial defense.

The Sixth set has 28,862 requests and seeks admissions concerning more than 1,500 contracts.

As such, Judge Netburn instructed the SEC to respond to the fair notice defense and those related to extra-territorial defense. She also ordered the SEC to respond to requests seeking to establish authenticity or genuineness.

Also Read: Ripple CEO goes Rambo on SEC, says no settlement even if court rules out XRP as security.

However, Judge Netburn deemed the remaining 28,849 requests as theater.

Despite the Defendants’ protestations that this volume of requests is reasonable and will narrow the issues for trial, it is hard to view this stunt as anything more than theater

Judge Sarah Netburn in her order regadring Ripple’s 29,947 requests of admission.

Hence, she granted the SEC’s motion for a protective order for the sixth set of requests and denied it for the fourth and fifth sets.

Ripple’s Boss Continues His Rambo Streak

In other news, Ripple CEO Brad Garlinghouse ripped into the SEC, claiming the regulator’s lawsuit is responsible for Ethereum replacing Ripple.

The Ripple boss stated that SEC’s favorable treatment of Ethereum is partly responsible for Ether’s success. XRP was the second-largest crypto by market cap in Dec 2017, before Ethereum dethroned it. Currently, Ripple is the seventh-largest cryptocurrency.

XRP was the second most valuable digital asset. As it became clear the SEC had given a hall pass to ETH, ETH obviously has exploded, and that clarity has helped.

Brad Garlinghouse, CEO of Ripple, on SEC favoring Ethereum.

Mr. Garlinghouse highlighted the irony in SEC’s actions, commenting that the SEC claims to protect consumers. However, nearly 50,000 XRP owners in the U.S. are trying to sue the SEC for ‘protecting them.’ Additionally, Ripple’s CEO also noted the SEC’s aggressive stance against cryptocurrencies.

He gave the example of his firm’s legal battle with the regulator. Mr. Garlinghouse also mentioned the SEC’s actions against crypto exchange Coinbase as an example.

Earlier this month, U.S. District Judge Analisa Torres ruled that XRP holders could not participate as defendants in the lawsuit. Recently, the courts granted the SEC’s request to extend the discovery deadline in the Ripple lawsuit. However, the presiding judge noted that a deadline extension would not affect the schedule to resolve the case.

At the time of writing, XRP was trading at $1.102, up 1.36% on the day.

How useful was this post?

Click on a star to rate it!

Related Articles

Our Partners

SwapCoin.com RapidCoin.com ChangeNOW.com Paybis.com