In the lawsuit, the SEC challenged Ripple’s letter request to force SEC employees to release XRP trading data. This mandatory data discovery request will prove that SEC employees are allowed to trade in cryptocurrencies, including XRP and other digital assets. However, in its objection letter, the SEC took the opposite view.
SEC Sets Ethical Objective of Pre-release Data
The US Securities and Exchange Commission has appealed to the court to deny the defendants’ motion for mandatory disclosure of the XRP trading dispute. The plaintiff alleged that the data contained sensitive financial information collected by the SEC’s Office of Ethics Counsel to ensure employees were complying with the Commission’s code of ethics and had nothing to do with whether the transaction complied with SEC securities laws. In addition, the SEC argued that Ripple’s request was “less relevant” and an “unreasonable interference” with the sensitive financial information of SEC employees.
The committee announced that the pre-clearance guidelines clearly stated that “clearing a request to enter into a financial transaction, it makes no determination as to whether the transaction complies with the securities laws. That express statement by the Ethics Counsel renders irrelevant the pre-clearance information Defendants seek.”
SEC Emphasizes on Regulatory List
The plaintiff emphasized the “prohibited holding” list and the ethics advisor’s “watchlist”, which are used to confirm compliance with the agency’s ethics laws and therefore prohibit SEC staff from owning the agency’s companies. However, according to the SEC, no XRP was on these lists until April 13, 2018.
The list of prohibited holdings includes financial products whose securities are directly prohibited by SEC employees because they are directly regulated by the SEC. The plaintiff confirmed that “the list never included Bitcoin, Ether or XRP, which allegedly were those entities”.
In addition, the watchlist includes companies that may fall within the scope of the Supplementary Code of Ethics and these companies will continue to be included in the pre-screening category. However, XRP was only added to this list after April 13th