While many people in the group expect Ripple Labs and the SEC to reach a settlement quickly, since Gary Gensler leads the latter, it seems like the case itself does not show any signs of slowing.
A case in point is the recent letter from the SEC that attacked the protection of the defendant “fair notice.”
However, this is not the first time this has been achieved by the governing authority. The SEC said back in March,
“Ripple seeks to avoid liability for its unregistered offering by diverting the Court’s attention with a number of affirmative defense arguments sounding in equity but all pigeonholed into the label ‘fair notice.’”
In fact, the defense may be “crucial” for the opportunities Ripple has for the aforesaid legal proceedings according to attorney Jeremy Hogan.
In its last letter of 7 May, the SEC has now called on the courts to oblige defendants to provide records which constitute and review any legal advice that Ripple has requested in the past. This conference will be held informally. These legal guidance would concern whether Ripple’s offerings and purchases of XRP are subject to federal securities legislation or in accordance with it;
According to the SEC, such a motion is in its right because it argues that the defendants are “playing the legal counsel it has got” in order to prove their affirmative protection by using the same approach. In doing so, the letter also added the Ripple has renounced privilege.
The SEC also charged Ripple Labs with “selective divulgation” to third parties, alleging that the blockchain company failed to provide all these documents which are mandatory for the SEC to verify the defense facts.
“… the court should not permit Ripple and its employees to assert a defense that they had no notice that securities laws applied to their conduct, while Ripple is selectively denying the SEC access to documents and testimony sufficient to allow the SEC to test and rebut this defense.”
Going on to cite how the defendants have selectively disclosed differing opinions given by competing law firms, the SEC argued,
“The SEC requires access to these documents in order to demonstrate the affirmation Ripple missed ‘a reasonable warning’ of the implementation of securities laws of XRP’s offering and sales and what it ‘reasonably understood.’
In conclusion, Ripple should also be obligated to divulge all legal advice which it receives from SEC, according to a legal precedent. The lawyer for the SEC, Jorge Tenreiro, argued that, in citing Doe v. United States,
‘It is a well-established theory that the declaration of factual claims by a party can, in such conditions, lead to the compulsory removal of rights in matters relevant to the claims claimed by considering justice to an adversary.