- Prior to the latest discovery hearing, the SEC sent out requests to foreign regulators to seek documents related to Ripple from their respective countries.
- The blockchain firm believes that the financial watchdog exercised the weight of the US government, arguing that the memoranda of understanding are compulsory.
- The judge has yet to provide a ruling after a case precedent was introduced to the lawsuit.
While Ripple executives Brad Garlinghouse and Chris Larsen filed motions to dismiss the Securities & Exchange Commission (SEC) case, there is still a month before it would be decided.
SEC attempted to gain an unfair advantage
The $1.3 billion lawsuit filed by the SEC against Ripple Labs continues as the XRP community flocked to listen in on the discovery hearing.
The agency has been sending formal government requests to other foreign regulators to get documents from companies in respective countries that work with Ripple and subsequently forward them to the SEC.
Ripple found out about the requests directly from one of the companies and moved to stop the SEC from sending the requests since it is outside the Rules of Federal Procedure. The main issue discussed in the discovery hearing is whether the memorandum of understanding (MoU) between the federal government and foreign governments is mandatory or voluntary.
Jorge Tenreiro, the senior trial attorney at the SEC, stated that the MoU process was not compulsory. However, the flow of securities and money does not stop at a country’s borders. The agency added that it does not intend to disclose the content of the MoU requested since this information is privileged.
Ripple responded that the SEC was attempting to “gain an unfair advantage” and that the requests do not sound “voluntary” at all. The company argued that the MoU process is compulsory and asserted that the agency is leveraging the “weight and power of the US government.”
Judge Sarah Netburn told Ripple:
My understanding is that although the foreign company must comply with the request by its government, the foreign government does not have to comply with the SEC’s request.
Attorney Jeremy Hogan commented that the reason for this ruling is because the Judge believes it would provide the litigating parties equal power. The Ripple attorney responded that there is a basis for not providing the documents since the requests are not voluntary, primarily when smaller countries deal with a large economy like the United States.
Judge to review case precedent before ruling
The legal battle sits on case precedent SEC v. Badian, where Judge Robert Pitman ruled that the regulator could use these types of MoU requests. SEC attorney Jorge Tenreiro also represented the financial watchdog in the Badian case and described the ruling:
Thus in SEC v. Badian, Magistrate Judge Pitman considered and rejected defendant’s request that in an enforcement action, the federal rules require that the SEC be Ordered to cease using Requests for use in litigation.
The cross-border remittance firm distinguished itself from the Badian case, stating that the defense attorney made a mistake by telling the judge that foreign governments were voluntary – which was false. Since the case was ruled based on incorrect facts, Ripple argued that the judge should not look to the case for persuasive authority on the XRP lawsuit.
At the end of the hearing, the Judge did not provide a ruling immediately. Attorney Hogan believes that Judge Netburn would like to take a look at the Badian file again to see if Ripple is distinguishable from the case. After considering the factors of the case, the Judge will announce her verdict in the coming days.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
Two key dates over the SEC request to freeze Binance assets

Crypto exchange Binance must respond to the US Securities Exchange Commission’s (SEC) order to freeze assets tied to its subsidiary Binance.US by June 12, ahead of a court hearing about the case on June 13, according to the D.C. district court schedule.
Ethereum price declines as Coinbase ETH liquidity staking platform sees mass withdrawals

The US Securities and Exchange Commission’s (SEC) crackdown on Coinbase led to mass withdrawals of Coinbase wrapped staked Ether (cbETH) since Tuesday, acting as a bearish catalyst for the asset’s price.
Dogecoin Price Prediction: History suggests a potential 30% rally in DOGE

Dogecoin (DOGE) price has been trading within a fixed range over the last six months, taking seasonal leaps as volatility increased. With this accumulation pattern, the king of meme coins could be en route to complete the next bounce cycle.
Axie Infinity price recovery delayed despite investor deposits hitting a five-month high

Axie Infinity price, following the broader market cues, is trending downwards for the moment as the bearishness in the market has grown considerably. Incited with the regulatory crackdown by the SEC, the investors have resorted to offloading their holdings for now.
Bitcoin: BTC targets $30,000 as short-term bias turns bullish

Bitcoin (BTC) price shows a clear sign of the bulls’ victory. After failing to trigger a steep correction, bears look now out of context, at least in the short term, allowing buyers to restart a minor uptrend.