SEC Ordered to Produce Documents On Its Internal Digital Asset And Cryptocurrency Activities
The United States Securities and Exchange Commission (SEC) has recently received an order from Judge Sarah Netburn, a U.S. Magistrate Judge in the Southern District of New York, to produce internal policies that would govern the SEC’s employees in relation to their trading, purchase, or sale of digital assets, including cryptocurrencies.
The order comes at an unprecedented time, given how the SEC has refused to provide documentation on how it monitors and regulates its own employees’ digital assets and cryptocurrency activities. According to the statement on the order, the pronouncement was made through a request by Ripple Labs Inc., which is led by Bradley Garlinghouse and Christian Larsen. The order was a reiteration of previous requests to the SEC initially filed 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.” Judge Netburn stated.
The statement quotes the SEC’s statement on the matter, deeming the order as “irrelevant and needless,” and since then refusing to comply with the request. Following the SEC’s resistance to the call for the order to produce such documents, Judge Netburn reaffirmed the search as relevant because of the SEC’s involvement with digital assets, in particular through its FinHub Electronic Mailbox.
“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 magistrate added.
The order marks a crucial turn in the ongoing legal battle that Ripple is facing over its digital asset, XRP. If the SEC complies to the Request for Production of documentation on the agency’s “policies governing SEC employees” it would show that the SEC itself has categorized and classified Ripple’s XRP as a digital asset similar to Bitcoin and Ethereum, reflecting the agency’s views on the matter.
“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.
At press time, Ripple’s XRP is trading at $0.2226, down by 26% over the last week. Following the request from the court, the SEC has not responded with a public statement on whether it would comply with the request or continue to dismiss it as irrelevant to its ongoing lawsuit against Ripple Labs Inc.