The US Securities and Exchange Commission recently received an order from Sarah Netburn, the US Magistrate Judge for the South District of New York, demanding the establishment of internal guidelines that would govern the SEC’s employees to manage the trading, buying or selling of digital assets, including cryptocurrencies.
SEC Refuses to Provide Documents to Monitor and Regulate Its Employees’ Digital Assets and Cryptocurrency Activities
Due to the U.S. Securities and Exchange Commission refusal to provide documents to monitor and regulate its employees’ digital assets and cryptocurrency activities of its employees; the order was issued at an unprecedented time. According to the statement of the order, the statement was made at the request of Ripple Labs Inc. under the direction of Brad Garlinghouse and Christian Larsen. The order reiterated the previous filing, originally filed with the SEC on April 6, 2021, and reaffirmed on May 6, 2021.
“Despite that repeated instruction, the SEC persists in refusing to search an obvious repository for responsive evidence on external communications: the SEC’s FinHub electronic mailbox.” said Judge Netburn.
The statement cited the US Securities and Exchange Commission statement on the matter, in which it argued that the order was “irrelevant” and subsequently refused to comply. After the SEC resisted the request to order such documents, Judge Netburn reiterated that the search was relevant because the SEC was involved in digital assets, particularly through its FinHub email address.
“The FinHub electronic mailbox is a readily searchable repository of third-party communications about bitcoin, ether, and XRP, yet the SEC has flatly refused to search the FinHub mailbox.” the Judge added.
Ripple Scores Another Victory in the Lawsuit
The order marks a critical turning point in the ongoing legal battle over Ripple’s digital asset XRP. If the SEC meets the Request for Production of documentation on the agency’s “policies governing SEC employees” it would show that the SEC itself has classified Ripple’s XRP as a digital asset similar to Bitcoin and Ethereum, in the agency’s views on this issue.
“The documents Defendants seek in this request are relevant because they show how the
SEC itself has categorized and classified XRP and other digital assets, including bitcoin and
ether, pursuant to its own policies.” Netburn stated in the request.
According to the court’s inquiry, the US Securities and Exchange Commission has yet to respond to whether it will comply or its public statement is inconsistent with Ripple Labs Inc.’s lawsuit.