The U.S. SEC Fined in the Ongoing Ripple Lawsuit

It has been a back and forth between Ripple and U.S. Securities and Exchange Commission (SEC) lawyers in the ongoing lawsuit.

And now, Judge Sarah Netburn has ordered the SEC to cover expenses that Ripple, the for-profit blockchain payments company whose CEO and executives are entangled in the case, would incur when filing a motion to re-depose Dr. Albert Metz’s expert report, according to court documents filed on April 19.

The overseeing Judge noted that the SEC’s action was “improper” and submitted late. Consequently, the agency must cover legal costs for a small part of the ongoing proceedings.

Preceding this judgment, the regulator served Ripple with a supplemental report on the last day of discovery back on February 28, 2022. However, Ripple’s lawyers felt that the last-day filing was not permissible, arguing that the supplemental report didn’t divulge new information to forward the regulator’s cause. Earlier on, the SEC and Ripple had agreed to bear costs that may arise from submitting their respective expert reports.

Still, the optimistic Ripple community was dealt a minor blow when the Judge denied their lawyers’ motion to dismiss Dr. Albert Metz’s supplemental expert report. With this directive, the reopening of the discovery has been postponed to May 13, 2022, for Ripple lawyers to re-depose the expert’s report.

In an extract, Judge Sarah Netburn says:

“Overall, given the harshness of preclusion, I decline to strike Dr. Metz’s supplemental report. Instead, expert discovery is reopened until May 13, 2022, for the limited purpose of re-deposing Dr. Metz regarding the analysis in his supplemental report, limited to four hours, and, at Defendants’ discretion, filing a supplemental report responding to the new analysis.”

Over the past few months, the report has stirred controversy in the crypto and legal worlds. Specifically, the report seeks to determine whether Ripple’s official announcement significantly affected the XRP price. XRP is the official coin on the XRPL public ledger that the SEC considers a security under the Howey Test.

Nonetheless, Ripple maintains that Dr. Albert Metz’s report is inconsequential and illegal, violating section 26 of the Federal Rules of Civil Procedure and well-settled decisional law. As such, the report should be excluded pursuant to Rule 37(c)(1).

In March, Judge Torres denied the SEC from barring Ripple from filing a fair notice defense, blasting the agency for failing to prove fine points of the ongoing case.