Judge Denies Motion for Insights to XRP trading by SEC Employees
New York Judge Sarah Netburn has denied Ripple Labs’ motion to order the U.S. Securities and Exchange Commission (SEC) to hand over records of its employees’ crypto transactions. Ripple filed the request on August 27to prove that the agency did not consider XRP to be a security if it were discovered that SEC employees had traded XRP.
The Ripple defense team argued that individual trading decisions would at the bare minimum display the lack of clarity regarding the status of XRP.
Should such evidence come up, it would arguably undermine the SEC’s allegations that the defendants, Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, acted recklessly and would strengthen their fair notice defense. They have both contended that they are entitled to know whether the SEC permitted its employees hold and trade XRP “as market participants.”
While Ripple’s motion might be a fair one, Judge Netburn dismissed it and cited several reasons.
The Judge believes the SEC’s argument that “the preclearance decision process does not involve any determination by SEC Ethics Counsel that a trade complies with the securities laws,” is still relevant. The SEC previously did not have any provisions in place specifically towards XRP. Hence the trading history of SEC employees is not relevant, the magistrate ruled.
In addition, the privacy rights of the SEC employees were considered another important factor. Moreover, there was not enough legal justification to approve Ripple’s demands to the extent of crossing this civil right.
Thirdly, the court stated that, the SEC had no trading policy in place that during the period of interest. Without any regulations on crypto trading, SEC employees could not have acted in violation of any non-existent rules.
Ripple’s price remained largely unaffected following the news. Earlier in the week, Ripple’s defense team said they are not looking to settle the case.
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Author: Peter Siu