- The United States Security & Exchange Commission previously requested access to Ripple’s concerns regarding the legal status of XRP.
- Ripple Labs stated that the regulator’s requested communications are protected by attorney-client privilege.
- The judge decided to deny SEC access, marking another victory for XRP holders.
A victory for XRP holders, a public loss for the SEC
The US SEC previously asked Magistrate Judge Sarah Netburn to order Ripple to produce records of legal advice around whether the sales of the XRP token were compliant with federal securities laws.
The agency claimed that Ripple’s understanding of the legal status of XRP would support its $1.3 billion lawsuit. While the blockchain firm has denied these complaints since the start of the court case in December, the SEC wanted access to Ripple’s legal concerns.
According to a public filing, Judge Sarah Netburn denied the SEC’s motion and stated:
Ripple asserts that the SEC’s requested communications are protected by the attorney-client privilege, which has not been waived.
This decision bolstered the blockchain firm’s fair notice defense based on the argument that the securities regulator failed to warn the company and other market participants that XRP was an unregistered security.
According to Jeremy Hogan, an attorney closely following the case, the decision made by Judge Netburn was “very important,” because the Judge states Ripple’s subjective beliefs regarding XRP are not relevant to the fair notice defense. This move would “block the road the SEC wanted to use to fight the defense.”
Judge Netburn clarified that her conclusion only applies to this specific issue, stating:
The Court takes no position about whether Ripple’s pleaded defense is cognizable or if it will prove meritorious.
John Deaton, an attorney and community leader for XRP holders to intervene in the legal action, believed from the start that the SEC had little chance of getting Ripple’s legal advice memo unless the crypto payments company shared it with others.
Deaton also said that while Judge Netburn’s decision was a public loss for the securities regulator, the outcome alone was not enough to force the SEC to settle the case.
Further, Deaton agreed to a statement where a community member suggested that the decision means that the judge does not believe the argument that Ripple having fair notice because the firm had legal advisory is sound.