Ripple Vs. SEC Sees Last Scheduling Update As Rumors Swirl About SEC Supporter

Posted on January 20, 2023
News
By Mark Otto
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The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) received a slightly different schedule update yesterday, according to U.S. Attorney and former federal prosecutor James K. Filan via Twitter. In fact, as of today, no further deadlines are scheduled. All documents and all reply briefs have been submitted. “Everything is […][...]

“Everything is briefed. Now we wait,” Filan wrote. From now on, it’s up to Judge Analisa Torres to make a decision based on all the arguments presented in the more than two-year trial.

As Ripple CEO Brad Garlinghouse said in a recent interview at the World Economic Forum in Davos, no one knows how many months Torres will need to make a decision.

We expect a decision from a judge certainly in 2023. You don’t really have control over when a judge makes their decisions. But I’m optimistic that sometime in the coming single digit months we’ll have closure there.

Remarkably, the final documents filed on Wednesday have once again led to a heated debate. The SEC filed an objection to a request by “Third Party A” to redact all references to the company and the names of certain crypto trading platforms.

Ripple’s letter caused even more of a stir within the XRP community. The fintech company has filed an objection to the filing of an entity declared as an “Investment Banker Declarant.”

This investment banker wants to hide his name from the public, as well as the company name and his position in it. The investment banker is one of the few supporters of the SEC who filed an amicus brief last year in support of the agency’s motion for summary judgment.

Who Is Turning Against Ripple?

Ripple wants the name of the mysterious investment banker to be disclosed. Ripple’s legal team urges Judge Torres not to allow the declarant to remain anonymous because he made the declaration and entry into the case of his own free will.

However, the unidentified investment banker counters that disclosure increases the risk of “harassment.” This dispute over sealing has led the XRP community to speculate about who has an interest in supporting the SEC.

Attorney John Deaton, who is representing XRP holders with an amicus brief in the litigation, responded to speculation from community member Mr. Huber. The latter stated that Mike Novogratz of Galaxy Digital is his hottest bet.

Deaton has a similar view:

It will be interesting. He is a Ripple shareholder so that would be something. Not a bad guess because likely someone who had convos with Ripple. If not, could be someone from Tetragon.

But why Novogratz? It is known that he and Galaxy Digital own 1% of Ripple. Despite this, Galaxy Digital dropped its XRP product shortly after the SEC action against Ripple.

Probably, the suspicion stems from a September 2021 memo written by Deaton. At the time, he described the entanglements between the SEC, ConsenSys’ Joe Lubin, and Novogratz.

After Hinman’s speech, Lubin publicly predicted that Ethereum would be the only enterprise platform to get a free pass from the SEC and that for others – particularly Ripple – “a reckoning is coming.” Deaton further wrote:

Mike Novogratz, Lubin’s college roommate and a major investor in Ether, predicted just nine days before the speech that he would “bet dollars to donuts” that the SEC would declare ether to not be a security.

If you know Mike Novogratz, he cares deeply about his public perception and credibility and he would not go out on a limb and guarantee what the SEC was going to say unless he was assured of it from someone with personal knowledge.

Tetragon could be a good bet as the investment management group already sued Ripple once after the SEC filed its lawsuit to force the buyback of $175 million worth of shares. However, Ripple won the case and may have given rise to a supporter of the SEC.

At press time, the price stood at $0.3914, just below the key resistance zone on the 1-day chart.