Only when we see the quality of documents and depositions each side gets will we know how strong their case will be.
The SEC v. Ripple lawsuit is about to see a hell of a week as the fact discovery deadline approaches (lawsuit agenda) and many documents remain to be produced, according to attorney Jeremy Hogan.
The XRP-friendly lawyer shared in a video his surprise at how late in discovery the last two motions were filed, one to compel Ripple to produce internal “Slack” communications and another one to compel the SEC’s production of internal memos. The respective responses are due today and tomorrow.
“And this is all cutting it really close because once the 31st passes these issues are over. So I expect this to move very quickly this next week because I expect the Judge to want oral argument on these issues”, Mr. Hogan said.
It seems that the SEC has been taking depositions without having the documents it wanted, namely Slack communications, “and that is always a mistake – especially in Federal Court where you are not likely to get a second shot at the deponent”.
The attorney took the opportunity to analyze the motions in regard to each party’s strategy for the lawsuit. “It’s super interesting these two motions because it shows this dichotomy as to how the parties are approaching the case.”
In regard to the SEC, which is trying to build a case that XRP was sold as an investment contract and therefore a security, the agency will stay away from the technical issues of XRP (how the ledger was built, its (de)centralized nature, etc) “probably because the SEC realizes that is a losing argument for them”.
“So instead, the SEC is going to attack from a “marketing’ angle. The argument here is that Ripple marketed XRP like a security, treated it like a share of stock, tried to manipulate XRP price, etc. This is an attack from the flank and not the strongest argument – but it might be all the SEC has”, he explained.
The plaintiff has asked for the production of Slack messages of a number of Ripple employees, including “three members of Ripple’s marketing team, a member of Ripple’s XRP market team, and members of Ripple’s Finance team.”
“What does the marketing team have to do with whether XRP is a security or not? Absolutely nothing. But they have everything to do with how Ripple marketed and treated XRP”, he said, adding that about a third of total requests from the SEC are related to marketing efforts or Ripple’s influence on XRP.”
As for Ripple’s strategy, Mr. Hogan reminded the request for the SEC’s internal documents about whether XRP and Ether were securities, which was ordered by the Judge but to no avail. That might change in the coming week as the fact discovery comes to an end.
Ripple counsel Matt Solomon argument in the most recent motion said: “Discovery, in this case, has confirmed that during much of the same period, market participants and the SEC itself were still uncertain about whether or not digital assets generally, and XRP specifically, should be subject to regulation under the federal securities laws.” This probably means that Ripple has evidence the SEC itself wasn’t sure whether XRP itself was a security.
In conclusion, the plaintiff is going to stay focused on what Ripple did, particularly the marketing for the XRP, and Ripple is focusing on what the SEC did, namely the agency’s understanding of the nature of XRP and lack of proper guidance.
Only when we see the quality of documents and depositions each side gets will we know how strong their case will be, the lawyer stated, adding the importance of these motions and hearings as bricks to build a case.