A federal judge has refused the Securities and Exchange Commission's (SEC) plea for reconsideration of the deliberative process privilege (DPP). The court's decision has been hailed as a major victory for Ripple in its long-running battle with the regulator.
The SEC's attempt to "have it both ways" fails miserably.
Former top SEC official William Hinman told a Yahoo Finance crypto summit audience in June 2018 that ethereum was not a security since it was sufficiently decentralized.
The SEC claims that Ripple and two top executives knew the XRP digital currency was a security that should have been registered with the securities watchdog but marketed it to investors nevertheless, based on that historic speech.
The SEC was ordered to turn over emails including the draft of the Ethereum speech, as well as other documents, by the judge. However, the agency maintained that the DPP had protected these papers and that they should not be made public.
The court recently ruled that the SEC's argument that Hinman gave the lecture to communicate the agency's Division of Corporation Finance's digital asset regulation stance contradicts their previous claim that the speech represented his personal views.
"The SEC wants it both ways, but the Speech was either meant to reflect agency policy or it wasn't." The SEC cannot now deny its own position after insisting that it reflected Hinman's personal opinions. The court found that "the Speech was not an agency communication, and the discussions about its substance are not covered by the privilege."
According to the judge, the SEC is attempting to "minimize" the fact that it has publicly distanced itself from the speech in question.
Former federal prosecutor James K. Filan called the judgment a "very major win" for Ripple, noting that the SEC now has 14 days to submit an appeal with District Judge Analisa Torres.
Will the SEC be forced to reach an agreement?
In the current legal hearings, the SEC was not left high and dry. The agency's redaction motions were granted by the court. In brief, the judge agreed to the SEC's suggested redactions of handwritten notes from SEC staff discussions with third parties.
The SEC is contesting Ripple's request to start a preliminary ruling by May unless further facts are presented in the litigation. The preliminary ruling is anticipated to be decided by the judge later this month.
The key question is why the SEC appears to be attempting to prolong the process. To the agency's dismay, legal experts predict the XRP case will be settled sooner rather than later.
They claim that the SEC is now in a bind, and that the batch of documents it has been forced to turn up is so crucial to the agency that they would rather make an agreement than let Ripple have them.
It's anyone's guess if the SEC will settle with Ripple.