Ripple has filed a request in recent months to find out if SEC employees are allowed to trade XRP, Ether, Bitcoin, and other cryptocurrencies, and to obtain annual certificates of institution staff showing their personal cryptocurrency holdings. With the judge’s rejection of Ripple’s request, the company received another blow by the court.
Magistrate Sarah Netburn denied Ripple’s request to obtain documents related to the Securities and Exchange Commission’s pre-approval decisions regarding cryptocurrency trading and personnel’s personal assets. According to the court, the defendants failed to justify the court’s intervention in the employees’ financial conduct.
As for the crypto assets of SEC employees, the judge pointed out that the disclosure of such information is prohibited by Congress to protect the privacy of government employees:
“Defendants with SEC employees’ annual purchases, sales and holdings of XRP. [ilgili bilgileri içeren] does not have the right to access its documents.”
As previously reported by KoinFinans; Ripple was trying to snag annual certificates showing SEC staff’s crypto investments so that they could find out if SEC employees are allowed to invest in XRP and the total amount of cryptocurrencies they own.
The company was particularly concerned with the fact that employees were allowed to trade XRP prior to March 9, 2019, when the official investigation order into the case was issued.
Defendants claim that individual trading decisions can shed light on the lack of regulatory clarity regarding digital assets. But the SEC insisted that its employees’ trading reports were “probably confidential.”
On September 3, the SEC argued that it would be “unjustified interference” to produce trade information of its employees in its appeal to Ripple’s application, which was stated to be denied above:
“Sensitive data (employee trading reports) is collected by the SEC’s Office of Ethics Counsel (Ethics Counsel) to ensure that SEC employees comply with ethical rules and avoid conflicts of interest – not to determine whether any transaction complies with securities laws.”
In essence, the document stated that obtaining prior authorization by the “Ethics Counsel” was not an indication of whether the transaction was in compliance with securities law and therefore would not be relevant to the case.
The judge noted that the regulator’s pre-approval process is irrelevant to the case, as it does not include a process or information on determining whether a particular cryptocurrency is a security, and disclosing how decisions are viewed by the institution’s Ethics Counsel could result in “secondary litigation disputes.”