“The problem with a settlement between now and November 12 is that the parties won’t know how strong each side’s position is until after discovery closes”.
The SEC v. Ripple lawsuit has taken several twists and turns but despite the court the discovery extensions granted by the court, there is a growing feeling that settlement may be on the horizon.
The key date is August 31 as the court scheduled a hearing with both parties to discuss the privilege dispute that has been dragging for months.
The SEC refuses to hand over critical documents despite the Judge’s insistence because it claims they are protected under the DPP (deliberative process privilege), which aims to protect not merely documents, but also the integrity of the deliberative process itself.
These documents, most regarding the SEC’s views on ETH were already found relevant by the Judge for the Court’s eventual analysis with respect to the Howey factors.
“In other words, this upcoming hearing is very important because Ripple could potentially get some documents that could really help it advance its position that ‘XRP is like Ether and in 2018 the SEC said Ether is not a security and therefore XRP is not a security’”, attorney Jeremy Hogan explained in a video.
According to Mr. Hogan, that triggered a chess match: “The SEC has deployed a Queen’s Gambit in this litigation – sacrificing its position on the Fair Notice Defense in order to solidify its central position that XRP was sold as a security”.
Because the Judge found Ether’s status relevant to the case in the April 6 hearing, the SEC filed William Hinman’s affidavit to protect him from being deposed: “my own personal views”, he said.
“The SEC was going to in a sense admit to some extent that there was confusion in the marketplace about digital securities in exchange for strengthening its position that XRP was a security. Because If Hinman and the SEC had taken an official position there would be more certainty for other crypto coins but in turn that would allow Ripple to argue XRP was just like Ether”, Mr. Hogan said.
Still, Mr. Hinman’s “personal views” argument may go into conflict with his statements in 2018 where he stated “we” as in the agency.
“And by arguing that the SEC took no position on whether ether is a security or not, it can argue that any comparison between the two is irrelevant. Now whether that argument works is complicated but the gambit at least allows them to make the argument. So, keep that in mind as we see the next couple of weeks unfold”.
The Judge has recently granted a motion to extend discovery again to accommodate the depositions of the individual defendants, Brad Garlinghouse (September 14) and Chris Larsen (September 20).
This, however, may become irrelevant to the case if the key hearing on August 31 ends in a final blow for the SEC. That is the reasoning of attorney Hogan, based on YouTuber Bitboy Crypto’s views.
“The problem with a settlement between now and November 12 is that the parties won’t know how strong each side’s position is until after discovery closes”, Mr. Hogan continued, showing caution as the SEC is unlikely to settle before knowing the fate of its motion to strike Ripple’s Fair Notice defense.
“The SEC’s Queen’s Gambit has put a lot of weight on that motion and it’s still not resolved and the Judge has not told us when she is going to make a decision on it”.
The litigation has the best chance at resolving when and if the SEC’s gambit fails, he stated. “Otherwise, we are still looking at the Ripple case reaching the Judge on Summary Judgment in early 2022”.