A recent development in the ongoing legal battle between Ripple and the SEC has shed light on a potential weakness in the SEC’s arguments. The case centers on allegations that Ripple, a San Francisco-based financial technology company, violated securities laws by selling XRP as an unregistered security.
This question was resolved in July 2023. The case is in the remedies phase, with the SEC proposing penalties for Ripple to pay for alleged violation of securities laws with institutional XRP sales.
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The SEC Weakness Exposed
Fred Rispoli, a legal expert and XRP advocate, recently commented on Ripple’s motion to strike the SEC’s expert disclosure in its briefing. While surprised by the timing of the motion, Rispoli identified the SEC’s failure to request a deposition for specific witnesses which he considers a crucial omission.
Depositions are formal pretrial testimonies where witnesses answer questions under oath. This procedural step allows both parties to gather evidence and assess the credibility of witnesses before trial. The absence of a deposition request for certain witnesses could undermine the SEC’s case, especially if those witnesses were not properly identified in the initial disclosure statement.
Rispoli emphasizes the significance of this oversight, highlighting its potential impact on Ripple’s defense strategy. He argues that if the SEC did not request depositions for undisclosed witnesses, it could raise questions about the admissibility of their testimony in court.
He also questioned the timing, suggesting the motion would have been more effective if filed earlier in the proceedings. The potential consequences of this delay require further examination. However, Rispoli points out that Judge Sarah Netburn, who was recently appointed to the position, would decide whether to allow Andrea Fox, the SEC’s witness.
I haven't deep dived it but my very first thought was why did Ripple wait so long. Really should have filed it as soon as the issue came up, no later than March briefing. Also not good for Ripple that (if true) it never asked for the deposition. Both sides have case law for what…
— Fred Rispoli (@freddyriz) April 29, 2024
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Despite the questions surrounding the timing, Rispoli’s comments suggest a potential avenue for Ripple’s defense. If the SEC failed to request depositions for undisclosed witnesses, it could create a significant hurdle for its case. Judge Netburn may be compelled to consider excluding such testimony if it violates established procedures.
This development offers hope for Ripple as it seeks to defend itself against the SEC’s accusations. The legal battle continues to unfold, with all parties awaiting the court’s decision on penalties. They are still at loggerheads on an appropriate penalty, but a legal expert believes the case will end with Ripple parting with only $100 million.
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