Judge denies Ripple's request for SEC crypto trading disclosures

A U.S. magistrate judge has denied Ripple's request for documents detailing regulators' crypto trading activity. 

In a motion published to the federal register today, Judge Sarah Netburn declined to grant Ripple access to documents that could show whether employees of the Securities and Exchange Commission (SEC) have executed transactions in bitcoin, ether or XRP. 

The court had previously ordered the SEC to produce its trading policies related to crypto, and it was later revealed the regulator had none at the start of Ripple's reckoning. Ripple contends that when the firm's representatives met SEC counsel this August, the enforcement lawyers stated during the meeting that SEC employees were barred from trading XRP after the formal order of investigation was issued in 2019.

However, Ripple also claims that the SEC has yet to produce any documents backing up their statement despite being compelled by the court.

In addition to those documents, the Ripple legal team argues that including individual trading decisions of SEC employees in discovery "will, at a minimum, expose the lack of clarity regarding XRP's status and whether the SEC believed XRP to be a security," according to Netburn's analysis in the denied motion. But that doesn't seem to be pertinent to this case, according to Netburn:

"Defendants have not shown that such individual trading decisions bear on the issues in this case. Although the SEC’s policies (or absence of policies) may provide relevant evidence related to fair notice or recklessness, how an Ethics Counsel viewed a trading decision is more likely to cause confusion or create collateral litigation disputes," read the decision.

Additionally, those SEC disclosures promise employee privacy, and Ripple has yet to prove that suspending those protections would make a material difference to the case, according to Netburn. 

Despite losing the battle on individual trading logs, Netburn's motion did reiterate that the SEC should provide Ripple with documentation confirming its recent claim that agency employees were directed to refrain from trading XRP in 2019. 

About Author

Aislinn Keely joined The Block in the summer of 2019. She is a member of the outlet's policy team, holding down the legal beat. Before The Block, she lent her voice to the NPR affiliate WFUV, where she reported and anchored newscasts in addition to some podcast work. Aislinn is a proud Fordham Ram and editor-in-chief emerita of its newspaper. When she isn't writing or reporting, Aislinn is running and rock climbing.