SEC v. Ripple could end with Summary Judgement on Fair Notice: “No one could be sued after that”

The SEC v. Ripple case on Friday had a hearing on the SEC’s motion to pierce the attorney/client privilege of Ripple and its lawyers.

The regulator wants Ripple Labs to turn over documents related to legal advice it received in 2012 prior to the sale of its token, XRP: whether the firm was legally required to be registered with the SEC.

While Ripple Labs fights off that request arguing for attorney-client privilege, the SEC claims that legal advice could be proof that the firm “reasonably understood” the nature of XRP. If not subject to federal securities law then the company waived any privilege over those communications.

SEC attorney Jorge G. Tenreiro said Ripple’s lawyers knew what the law required and that it could be a security: “Their lawyers knew from the very beginning, and to now come and say to the court, “nobody knew”, and leave us unable to rebut that by showing all of the advice that they got, not just what they selectively disclosed to third parties, is fundamentally unfair and fundamentally against the fairness principle as recognized in this circuit.”

It was in late April, that the SEC filed the motion to dismiss Ripple’s “lack of due process and fair notice” defense that the XRP token could be deemed a security.

Ripple then filed its Memorandum of Law in opposition to the SEC’s motion to strike Ripple’s lack of due process and fair notice affirmative defense. The defendant pointed to SEC’s misrepresentations of the Judge and omissions.

During the hearing, it seems that SEC’s Jorge Tenreiro said that Ripple Labs wants to push for a Summary Judgement on its lack of due process and fair notice affirmative defense.

Attorney Jeremy Hogan reported that moment and suspects that Ripple Labs wants that hearing to happen even before the hearing regarding the nature of XRP, which could end the trial without that regulatory clarity, but with a precedent that would allow any future defendant in a similar lawsuit to claim they had no fair notice from the SEC.

“The SEC attorney let out that the Ripple attorneys told him that Ripple intended to file for Summary Judgment on its Fair Notice defense in August”, Hogan said.

“This is before even the close of discovery and it’s faster than I expected and makes me think they might set the hearing on their defense before even the hearing on whether XRP is a security or not.

“A Ripple victory at that hearing would of course end the whole case. Would XRP have “clarity” then? Yes and no. XRP’s status would not, but no one could be sued after that by the SEC because there would be case precedent that no one had Fair Notice anyways”, he concluded.

The cryptocurrency market crashed this week as leveraged trading takes its toll.