In a major victory for Ripple Labs, a federal judge has ruled that the company does not have to turn over its internal communications to the Securities and Exchange Commission (SEC), which is suing Ripple for allegedly selling unregistered securities.
The SEC had sought access to Ripple's emails, memos, and other documents that could show how the company and its executives marketed and sold XRP, the digital currency that powers Ripple's global payment network. The SEC argued that these communications could reveal whether Ripple knowingly misled investors about the nature and status of XRP.
However, Judge Sarah Netburn of the U.S. District Court for the Southern District of New York denied the SEC's request, finding that it was "not relevant or proportional to the needs of the case." She also said that the SEC's demand would impose an undue burden on Ripple and infringe on its privacy rights.
The ruling is a significant setback for the SEC, which has accused Ripple of raising more than $1.3 billion through an ongoing and illegal offering of XRP. The SEC claims that XRP is a security, not a currency, and that Ripple failed to register it as such or seek an exemption from the registration requirements.
Ripple, on the other hand, maintains that XRP is a decentralized and open-source digital asset that is not controlled by any single entity. It also argues that XRP has a clear utility as a bridge currency for cross-border payments, and that it has been widely recognized as a virtual currency by regulators around the world.
The case, which was filed in December 2020, has attracted a lot of attention from the crypto industry and investors, as it could have far-reaching implications for the future of XRP and other digital assets. The outcome could also affect the SEC's ability to regulate the crypto space and enforce its securities laws.
The latest ruling is not the first time that Judge Netburn has sided with Ripple in the case. In April, she granted Ripple's motion to compel the SEC to produce documents related to its views on Bitcoin and Ethereum, two leading cryptocurrencies that the SEC has deemed not to be securities. Ripple hopes that these documents will support its argument that XRP should be treated similarly.
The case is still ongoing and no trial date has been set yet. Both parties are expected to engage in discovery and mediation in the coming months. Meanwhile, XRP's price has surged in recent weeks, reaching its highest level since May 2018.
