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Ripple (XRP) v SEC gets new twist after privileged’ documents blocked

According to the regulator, none of the listed documents, except for one legal memo, which is protected by more than one privilege, are relevant to the Howey analysis of XRP.

Ripple (XRP) v SEC gets new twist after privileged’ documents blocked
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The US Securities and Exchange Commission (SEC) recently filed a letter regarding the Court’s order to submit allegedly privileged documents requested by Ripple.

In the letter, the SEC argued that all documents listed in the submission, which will be reviewed by Judge Sarah Netburn in camera, are protected by the deliberative process privilege (“DPP”).

According to the SEC, many logged entries are at the same time also protected by the attorney-client privilege and the work product doctrine.

Motion practice recap

“The SEC has filed its Letter Brief regarding the allegedly privileged documents it’s withholding from Ripple. The SEC claims that every single document that will be reviewed by Judge Netburn in camera is privileged,” summarized James K. Filan, a former federal prosecutor for the US Attorney’s Office for the District of Connecticut, who also shared the filing on Twitter.

On August 10, Ripple filed a motion to compel the production of documents protected by the DPP, which included an “Appendix A.” 

On August 31, the Court ordered the regulator to produce the documents listed in the appendix for an in-camera review.

As clarified in the letter, the appendix consists of 13 entries, nine of which are internal SEC documents, while the other four entries include SEC communications with other law enforcement agencies.

While the regulator stated that it included in its privilege logs “memoranda or formal position papers discussing Bitcoin (BTC), Ethereum (ETH), and XRP,” it pointed out that the majority of the entries represent internal SEC communications, notes, and drafts, which are not responsive to the Court’s orders, and were logged “in a good faith effort to avoid further litigation.” 

Legal memo that addresses the application of Howey to XRP

The agency pointed out that only one of the intra-agency documents in Appendix A is “an internal memorandum or formal position paper that the SEC was required to produce or log pursuant to the Court’s orders,” while underscoring that this document is protected by all three privileges.

According to the SEC, the email from the Office of the Chief Counsel for Corporation Finance and an enclosed memorandum with a preliminary legal analysis of XRP attached were “drafted in anticipation of making a decision about whether to charge Ripple with violating the securities laws.”

As explained by the regulator, “this legal analysis was prepared to assist Enforcement staff in their analysis of Ripple’s XRP transactions under SEC v. W.J. Howey, 328 U.S. 293 (1946).”

Other entries include sets of handwritten notes taken by SEC officials during meetings, including meetings with outside entities, such as CME, a major derivatives market, and Japanese financial conglomerate, SBI Holdings, which counts as one of Ripple’s key partners. 

The regulator also listed communications reflecting inter-agency collaboration in deliberations among the SEC, Treasury, and the CFTC.

Another entry consists of an email enclosing a draft of the Hinman Speech for review and comment by SEC officials.

In the submission, the SEC also listed different presentations and emails containing talking points and Q&A sessions.

To conclude, the SEC argued that “the risk of impending privileged deliberations about not only XRP, but also Bitcoin and Ethereum is especially high” due to the “sensitive nature” of the agency’s role in regulating the market.

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