The legal brawl between the U.S. Securities and Exchange Commission and Ripple has seen new development, as the agency accuses XRP proponents of spreading false statements regarding its leadership on various social media platforms. This comes as the SEC attempts to dismiss Ripple’s request to depose former SEC officials.
SEC Says XRP Holders Are Propagating “False Statements” About Its Leadership
For context, Ripple made a deposition request to court days ago to be allowed to question under oath several high profile ex-SEC officers. While the officials were unnamed, observers noted that former Director of Corporation Finance William Hinman and Chairman Jay Clayton fit the profile.
On Thursday, the SEC filed a motion to magistrate Judge Sarah Netburn of Manhattan urging her to reject Ripple’s motion to subpoena William Hinman. The SEC argued that the XRP Army has been circulating “negative and false statements” about its leadership, including Hinman on social media.
According to the agency, making the former officials testify, along with the social media attention, would “increase the deterrent to public service”. In other words, it would discourage qualified individuals from working in high-ranking roles at the SEC.
Some of the beliefs disseminated by the XRP Army on social media about the SEC’s ex-officials include that Clayton and Hinman are using their insider knowledge to assist China to get ahead of the United States economy-wise and also several appeals to have them investigated.
The SEC also claims that if Ripple’s request is granted, it would result in an avalanche of similar requests to depose the regulatory agency’s top officials.
“Allowing Defendants [Ripple] to depose Director Hinman would likely result in Director Hinman being served with multiple deposition subpoenas by the many other persons alleged to have violated the registration provisions of the securities laws during his tenure at the SEC.
The agency further asserted that the former director does not have any first-hand knowledge of facts relating to Ripple’s sales of the XRP cryptocurrency and fair notice defense, and he therefore should not be deposed.
Other Developments In The Lawsuit
The SEC filed the lawsuit against Ripple last December, claiming that the fintech firm sold approximately $1.3 billion of its XRP token which constituted an unregistered securities offering.
Ripple has scored several victories against the SEC including recently when Judge Netburn granted the company’s request to access the agency’s internal trading policies. In particular, the Judge argued that the information requested by Ripple meets “the low bar for relevance”.
Additionally, the SEC Commissioner Hester Pierce (fondly known as Crypto Mom) told Bloomberg a few days ago that XRP is not necessarily a security. For her, the underlying investment contract is what qualifies as a security.
In the meanwhile, Jeremy Hogan, an attorney who’s closely following the SEC v. Ripple case, foresees that it will likely continue into early 2022 if there is no settlement.