Worst of all litigation battles between a “Regulator” and the “Regulated” is the dispute between the Securities & Exchange Commission (SEC) and Ripple. The dispute is pending before a US Court of Law in the form of a lawsuit in which the complainant is the US financial and security watchdog, SEC. While the defendant in the lawsuit is an issuer of XRP namely Ripple Labs.
XRP is amongst the top 5 leading cryptocurrencies of the world and has been labeled as “securities” by SEC. On the other hand, the contention of Ripple Labs is that XRP is an absolute “cryptocurrency” that cannot be claimed to be “securities”.
SEC had raised an objection to the status of XRP and quoted the US Securities Law to claim that under the law XRP is defined as “security”. Meanwhile, SEC’s claim has been denied vigorously by Ripple on the pretext that if Bitcoin and Ethereum are cryptocurrencies then so is XRP. Being the defendant, Ripple has produced several documents showing that XRP has been treated as “crypto” in several countries. It alleged that the watchdog is acting in a biased manner against XRP and not treating it equally like Bitcoin and Ethereum.
However, very recently, an interesting development took place during the course of hearing of the lawsuit. An application was moved before the US Court by Ripple in which the defendant asked the Court to direct SEC for producing numerous documents. It was claimed by Ripple that the document which hasn’t been annexed with the lawsuit contains authentic proof describing the real status of XRP.
The team of Ripple’s counsels argued that the watchdog was deliberately not presenting the documents in the Court. If these documents are placed before the Court then the Court will be able to do justice, argued Ripple’s legal team. The application was duly accepted by the Court and SEC was directed to cooperate with the defendant and produce the documents.
It was suggested by legal experts that these documents may contain the proof that is required by Ripple. They are arguing that if nothing important wasn’t there, then why SEC would refuse to supply these documents in the first place. But currently, the case is moving in the direction favoring the defendant.
However, SEC has now come up with a totally different strategy. SEC has moved an application in which it has sought permission of the Court to restrict documents’ access to Ripple and its executives. But knowing the Court had granted access to document and denial would entail contempt proceedings, SEC has changed its strategy.
As per fresh litigation strategy, SEC has alleged that Ripple as well as its key officials from the management are harassing SEC. SEC’s counsels argued that the production of documents has been sought by Ripple for ulterior motives. They claimed that the real intention and purpose of the defendant is to harass and malign the authority. The decision on SEC’s motion is still pending adjudication as the Court has so far not decided on the issue.