The Securities and Exchange Commission (SEC) has won the right to foreign assistance in the ongoing battle against Ripple. Earlier, the technology company was trying to block the government body from getting further regulatory information from overseas. However, in another development, there are still many opinions that XRP could be a currency and security at the same time.
Ripple: XRP could be a currency and security at the same time
In the affirmative presentation during a May 21 phone conference with Court Judge Sarah Netburn, Jorge Tenreiro, senior trial attorney at the U.S. Securities and Exchange Commission, argued. that Ripple’s lawyers told the company that XRP could be a currency and security at the same time.
“They were sophisticated players. They hired at least 12 law firms…Ripple’s supposed confusion has to be tested against what it was actually being told.”
The SEC is trying to force Ripple to give legal advice it got from lawyers about the status of XRP. Tenreiro claimed that the void for vague challenges to Howey was denied while pointing out that the defendants had injected their minds into the case.
“They have directly inserted their state of mind as part of their defense…”
When asked about additional interference in attorney-client relationships, Tenreiro said that Ripple would be gamer over if it chose not to heed the advice it received from lawyers:
“If they received advice and they did not follow, they would lose…What if their lawyer told them, they still have to deal with the SEC? That would be game over for their defense, that they were confused. We don’t know what they have given the exchanges… Ripple tells us, what you were thinking is relevant.”
He also argues that Ripple used is legal advice to influence trading platforms with the opinions of the lawyers.
Ripple attorney Gregory Rapawy stated that the advice Ripple received was not the subject of defense:
“It doesn’t matter that we believed and believe that XRP is not an investment contract – it’s strict liability. Our defense is fair notice, not on our state of mind.”
In response, Tenreiro asked Ripple to withdraw its affirmative defense. In addition, Rapawy says that Ripple is not resisting the discovery of non-privileged internal documents, adding that both parties’ internal documentations are potentially relevant to the fair notice defense.
Judge Netburn will announce the ruling as soon as possible:
“I’m going to take it under advisement. I will get an order out as quickly as possible.”
In another development, Magistrate Judge Sarah Netburn has denied Ripple’s motion to stop the U.S. Securities and Commission from sending Memorandum of Understanding (MoU) requests to foreign securities regulators. Ripple claimed that such requests were meant to intimidate its foreign business partners, but the judge asserts that there is no evidence to suggest that they were issued in bad faith.
The defendants wanted to compel the SEC to use the slow and inefficient Hague Convention process, but Netburn says that the MoU requests are permissible:
“There has been no argument that the Requests exceed the scope of any governing bilateral agreement. Instead, courts have routinely rejected the proposition that the Hague Convention is the exclusive or priority means of conducting foreign discovery.”
The SEC has to produce all documents obtained through its MoU requests, but it can withhold privileged ones from production. Last month, the agency revealed that three foreign counterparts had refused to provide any assistance.
Source: AZCoin News