• Court denies the motion to access any XRP trading history of SEC employees.
• It also directs the SEC to provide proof of preventing its employees from trading in XRP.

In the hotly emerging battle between Ripple and the SEC, the San Francisco-based blockchain startup seems to be on the back foot for now. The federal court has denied Ripple’s request to compel the SEC to produce documents that would highlight the pre-clearance decisions of the SEC employees transacting in XRP.

The court filing shows that federal judge Sarah Netburn denied Ripple’s motion to seek access to SEC employees’ trading history. Ripple had argued that the individual trading decisions, at minimum, would expose the lack of SEC’s clarity on XRP’s security status. The SEC had rejected such disclosure stating that they can’t share the private financial data of their employees. The court filing notes:

Because the preclearance process does not consider whether an asset is a security, Defendants have not shown that such individual trading decisions bear on the issues in this case. Although the SEC’s policies (or absence of policies) may provide relevant evidence related to fair notice or recklessness, how an Ethics Counsel viewed a trading decision is more likely to cause confusion or create collateral litigation disputes.

Moreover, because the data related to Ethics Counsel’s preclearance decisions is not sufficiently probative, it cannot justify the intrusion into SEC employees’ financial conduct, even if anonymized or aggregated.

The Privacy Act has finally come to the SEC’s rescue in protecting any kind of direct and indirect information from a system of records. Ripple has further responded to the motion. Ripple noted that its request of trading history possesses “no Privacy Act obstacle to the Court ordering production of this information.”

However, As per the Privacy Act, the defendant has to justify the disclosure of crucial details which Ripple could not.

Denying Ripple’s Annual Certification Appeal

Earlier, Congress issued a ban for the “disclosure of such financial information through federal privacy statutes and regulations in order to maintain government employees’ privacy”. As a result, Ripple’s annual certification appeal has also been denied.

However, Judge Netburn has said that the SEC should provide the necessary document that confirms that it refrained its employees from XRP trading back in 2019.

This is a major micro win in the case for the securities regulator. Ripple and the SEC have been engaged in the regulatory brawl since last December 2020. The securities regulator filed a case against Ripple for selling XRP as security through its 2013 ICO.

Ripple’s legal team recently confirmed that it has no plans to settle the lawsuit with the SEC. It is unclear for now how will the case proceed further. With neither party willing to come to any middle ground, it could lead to a further drag.

Read More: Ripple has no plans of settling with the SEC on XRP, legal team reveals