Since Jay Clayton, the former chairman of the US Securities and Exchange Commission, brought securities infringement charges against Ripple Labs, the legal battle has grown more intriguing by the day. In the latest twist, the SEC is trying to get its hands on the Ripple team's internal communication and the company is fighting it. The next two weeks will be intense for both parties as the fact-finding deadline ends.
First is the battle for Slack messages
We know that the SEC has been trying to get hold of the internal communication of the Ripple team. As we reported on August 10, the regulator filed an emergency warrant in the Southern District of New York seeking Slack messages from members of the Ripple team. He claimed that these messages contained critical and unique evidence against Ripple and XRP.
Ripple submitted its response to Slack's motion yesterday, August 16, opposing the measure.
In its motion, Ripple stated that, firstly, the messages are not court documents and "do not have the right to a presumption of public access." In addition, these messages could contain highly confidential material "that reflects sensitive and confidential competitive information about Ripple's business strategy, relationships with business partners, and internal business operations."
Acknowledging that the court may not be entirely on the side of your motion to keep the information confidential, Ripple concludes by stating:
If this Court determines that there is no basis for sealing any of these documents in their entirety, Ripple respectfully requests an opportunity to propose that specific redactions be made on the documents.
Then there's the battle over the SEC's internal memos
In the tireless fight to gain the upper hand through access to internal documents, Ripple has also been going after the SEC. Since March this year, Ripple has insisted that the regulator was "improperly withholding relevant information, potentially exculpatory evidence."
The SEC has been fighting back and is seeking to keep its internal documents to itself. Later today, the regulator is expected to submit its response to Ripple's motion when the deadline hits.
The most curious thing about the two parties is how late they have left all these important documents, observes attorney Jermy Hogan in his latest video. This is because August 31, which is less than two weeks away, is the deadline for the discovery of all the facts.
"I hope this moves very quickly next week (…) Hold on because we only have a couple of days left," the lawyer, loved in the XRP community, told his 115,000 YouTube subscribers.
Hogan further noted that the SEC has been conducting depositions without the documents on which it deposited these witnesses. "And that is always a mistake, especially in federal court, where you are unlikely to get a second chance to testify."
Here's why the SEC is hell-bent on Slack messages, and it's a game changer
The SEC's motion lives and dies on the charge that XRP is a security and Ripple violated securities laws, or so we think. But looking at the recent motions, it would appear that the SEC is gradually shifting its charges of focus.
Now, it's not just that XRP is a security, it's that Ripple traded it as one. And while the two sound similar, the second is specific about the company's stock, regardless of whether the SEC had issued sufficient guidance for cryptocurrency companies or not.
Attorney Hogan believes the SEC is changing its tune, as he can now see that it would lose if it continues to attack from the "technical side of things."
"The argument here is that Ripple traded XRP as a security, treated it as a stock, tried to manipulate the price …" he claimed.
This is most evident in one of his movements, although it is hidden in the footnotes. On this, the SEC describes the messages from Slack on Ripple that it wants to get its hands the most. It includes three members of Ripple's marketing team, a tell-tale sign of the SEC's new angle of attack according to the legal expert.
Now what does the marketing team have to do with whether or not XRP is a security? Absolutely nothing. But it has a lot to do with how Ripple traded and created XRP, ”Hogan believes.
Even more telling is that of the 38 requests for information from the SEC (although a good number of them are generic throwaway requests), "at least 12 or 13 of them are directly related to Ripple's marketing efforts."
Request number 6, for example, says:
"All documents and communications relating to Ripple's efforts to promote XRP purchases by retail buyers and / or speculators, including but not limited to communications with XRP retail buyers and / or speculators."
All eyes are now on the SEC and its response later today where it will argue against handing over its memoranda to Ripple. With the fact-finding deadline now less than fifteen days away, XRP holders and the largest crypto community will bite their nails and cross their fingers to see who lands what materials between the SEC and its formidable opponent, Ripple Labs. .