The SEC is trying to lengthen the trial time in the lawsuit against Ripple, which has been going on for more than two years.
Ripple is close to victory, the SEC is not giving up
It seems that for the SEC, the lawsuit against Ripple has become something of a mother of all lawsuits. More than two years have passed since the American stock exchange regulator initiated litigation accusing Ripple of selling investment products without having the proper approvals.
To be accurate, the SEC has been alleging for two years that Ripple and its executives, Brad Garlinghouse and Christian Larsen, offered XRP in the form of unregistered securities.
Despite this, things appear to be turning decidedly in the crypto company’s favor. The SEC is trying hard to lengthen the time and perhaps hope for a surprise card that could score a point for its prosecution.
In late July, the US Securities and Exchange Authority sought to block more than 1,700 holders of the Ripple token (XRP) from testifying at the trial in defense of Ripple Labs and to prohibit the company’s attorney, John E. Deaton, from participating further in the proceedings.
The SEC is now trying to block the request made by Ripple to be allowed to bring into court certain recorded videos that would be clear evidence of the inconsistency of the SEC’s charges against the company. Despite the fact that the judge, Sarah Netburn, gave a favorable opinion, the SEC rejected the application on the grounds that certain requirements had to be met, which Ripple called completely insubstantial.
Ripple’s attorney, James K. Filan, commented:
“The SEC’s response is simply an abuse of process and a waste of the court’s time. This is evidenced by the fact that the SEC waited five days to submit a response which consisted of a single sentence. Furthermore, it implied that the SEC had reinterpreted Ripple’s original request”.
Ripple’s trump card
Specifically, the documents that the crypto company wants to bring before Judge Netburn would include a speech given by SEC executive William Hinman in 2018 , when he was director of the SEC’s Corporate Finance Division (“Corp Fin”), on the very subject of the lawsuit.
In the speech, Hinman stated that a digital asset that may have been a security when first sold could lose that status as it becomes “sufficiently decentralized”. As an example, the SEC executive pointed to Ether, a digital asset that raised funds through an Initial Coin Offering, thus no longer being considered a security.
Without further guidance from Hinman or the SEC, many took the speech to suggest that XRP, the third largest digital asset at the time, after Bitcoin and Ether, could therefore not be considered a security.
However, according to the SEC, these documents would not be relevant to the case and could not be brought before the judge, who, on the other hand, would have already granted permission to use this documentary evidence in the hearing.
All these arguments demonstrate once again how the Securities and Exchange Authority is increasingly backed into a corner in a losing lawsuit, trying in every way it can to lengthen the time frame.