In an interesting turn of events, the US Judge Sarah Netburn has instructed the SEC and Ripple to exchange information formally over the telephone. This order follows Ripple’s motion to compel filed against the Securities and Exchange Commission (SEC).
Recently, lawyers on behalf of Ripple and its concerned officials requested Judge Netburn to coerce SEC to produce documents it was relying on. In the motion, the lawyers represented Ripple Labs, Chief Executive Officer Brad Garlinghouse, and Executive Chairman Christian Larsen.
If one would recall, in December last year the SEC had made a case against the technology company. SEC had claimed that the token Ripple created, XRP wasn’t a currency but rather a security. Legal action followed wherein Ripple and two of its executives were charged with offering unregistered securities for $1.3 billion.
The SEC stated that Ripple’s co-founders Larsen and Garlinghouse raised capital to finance the company’s business and exchange XRP for non-cash considerations. While doing so Ripple and its executives failed to satisfy these core investor protection action provisions. As a consequence of this investors lacked information to which they were entitled.
These severe allegations sparked a debate because SEC claimed that some crypto tokens are investment contracts and that XRP fell into that category. However, the SEC could not provide conclusive statements. This was primarily because the law on crypto is not clear as yet, therefore whether SEC has jurisdiction in this regard is unclear.
Now with the recent motion, Ripple’s lawyers challenge these accusations made by SEC a few months ago. It was argued by the lawyers that it was SEC’s refusal to produce the documents requested by Ripple that prompted the motion. In particular, it was alleged in the motion that the regulator had failed to exhibit any document that concerned Bitcoin or Ether. These two digital tokens are quite similar to XRP. Ripple lawyers want to know how these two are categorized as non-securities when XRP is being categorized as a security.
The lawyers also asserted that SEC had failed to display any internal documents with respect to XRP’s legitimacy and legal status. They are seeking to be apprised with any of the 10 documents out of 19 that SEC claims to have procured.
Following the motion, the Judge in her order directed the two concerned parties to hold a virtual discovery discourse over the telephone. In the order the telephonic conference is scheduled for the 6th of April. The parties will discuss about the disclosure of all the documents from Bitcoin and Ether documents to those SEC is using against XRP.
This order has made Ripple’s Twitter supporters praise the judge. They believe that the conference call and production of documents will make Ripple’s case stronger.
Meanwhile the order also states that the public could also hear the discovery call. They can dial-in using the conference number that will be shared with the parties to the list.