Expert Predicts Court Will Deny SEC Motion in Ripple Lawsuit

The crypto expert predicts that magistrate Sarah Netburn will deny the SEC’s motion to compel certain post-complaint discovery in the Ripple lawsuit.

Following Ripple’s opposition to the SEC’s motion to compel, crypto enthusiasts have taken to the X platform to speculate how Magistrate Sarah Netburn will rule on the matter. 

SEC and Ripple Positions on Post-complaint Discovery 

Recall that the SEC, in a January 11 motion, asked the court to compel Ripple to surrender two documents and respond to one interrogatory. 

The documents include Ripple’s audited financial statement from 2022 – 2023 and the post-complaint contract governing the company’s institutional sales. The SEC also wants Ripple to disclose the proceeds of its institutional sales of XRP. 

Expectedly, Ripple opposed the motion, citing two significant reasons why the judge should deny the requests. According to Ripple, the SEC’s post-complaint requests are irrelevant and untimely. The company argued that since fact discovery closed in 2021, reopening the phase could result in a lengthy litigation. 

Court to Deny SEC Motion 

Reacting, prominent crypto expert and XRP community member Ashley Prosper speculated that Judge Netburn will deny the SEC’s motion to compel. 

According to him, the best outcome the SEC can hope for is the judge scheduling a hearing before she finally denies its requests. 

#XRP #XRPCommunity
I think Judge Netburn will deny the SEC’s motion to compel. The best the SEC can hope for, in this instance, is a hearing before the denial. https://t.co/N6iMsVFLK4

— Ashley PROSPER (@AshleyPROSPER1) January 19, 2024

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Notably, Prosper is famous for his predictions on the SEC v. Ripple case. It bears mentioning that Prosper also gained popularity in the XRP community when he filed a Freedom of Information Act (FOIA) request in 2022, seeking the SEC’s communication with JP Morgan regarding Ripple and XRP. 

Like most XRP enthusiasts, Prosper alleged that some private companies like JP Morgan instigated the SEC to sue Ripple. However, all efforts to get the SEC to surrender its communications with JPMorgan have yet to yield positive results so far. 

Legal Expert Questions Motive Behind SEC Request 

Meanwhile, pro-XRP lawyer Bill Morgan questioned why the SEC is seeking post-complaint documents from Ripple. 

The legal expert argued that the rationale behind the SEC’s motion to compel certain discovery is to reopen litigation to determine whether Ripple’s post-complaint sales satisfy the Howey Test. 

Thanks James. Ripple says the SEC cannot show good cause why there should be further discovery concerning post complaint sales when discovery was completed in 2021 and the SEC was aware then of Ripple making post complaint sales. As usual it seeks to change its position.… https://t.co/F2r6F2chd0 pic.twitter.com/9maVZaeEQj

— bill morgan (@Belisarius2020) January 19, 2024

Attorney Morgan shared an excerpt from Ripple’s latest filing, which also corroborates his claim. In the letter sent to Magistrate Netburn, Ripple argued that: 

“This [SEC request] necessitates a searching analysis of whether each post-complaint sale met the Howey factors, and would require an analysis, among other things, of whether these purchasers—all but one of whom were ODL customers—expected profits, and relied on Ripple’s statements in forming that expectation.” 

Reacting, Attorney Morgan questioned how an ODL customer would expect profit from using XRP. 

For context, ODL now rebranded to Ripple Payment, is a payment solution developed by Ripple that facilitates cross-border settlements. It leverages XRP as a bridge currency between two fiats.