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On January 13, 2022, the Court presiding over the Securities and Exchange Commission’s enforcement action against Ripple Labs, Inc., and its founders Bradley Garlinghouse, and Christian Larsen ruled that the Commission will be required to turn over certain internal communications the Commission had sought to protect. The materials include a pre-publication draft of the influential June 2018 speech by then Director of the Division of Corporation Finance, William Hinman, entitled Digital Asset Transactions: When Howey Met Gary (Plastic). In the speech, Hinman discussed a securities law analysis for digital assets.

Defendants sought certain internal communications and handwritten notes of Commission staff to challenge the SEC’s allegation that Larsen and Garlinghouse were objectively reckless in believing that XRP was not a security and that Ripple was on fair notice that XRP was a security. The Commission sought to protect these materials from disclosure on the ground that they are protected by the deliberative process privilege, which shields from disclosure documents or communications reflecting advisory opinions, recommendations, and deliberations in government decision and policy making processes. The Court granted in part and denied in part defendants’ motion to compel. Among other things, the Court declined to protect a staff email enclosing a draft of Hinman’s Gary (Plastic) speech because – consistent with the standard disclosure given by all Commission personnel when they speak publicly – the speech reflected Hinman’s personal views and did not necessary reflect the views of the Commission or its staff.


The Commission filed the civil suit against Ripple Labs Inc. on Dec. 22, 2020, claiming Ripple’s offers and sales of XRP constituted securities transactions. While the Court’s decision in this discovery dispute likely will not impact the outcome on the merits, an adverse outcome for the Commission in this closely-watched case could effectively curtail its ability to regulate cryptocurrencies it views as securities.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


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Philip Moustakis | Counsel

A former senior counsel in the SEC’s Division of Enforcement, Philip advises companies and individuals at Seward & Kissel on cryptocurrencies and blockchain technology, SEC enforcement matters, other regulatory investigations, and internal investigations. As a founding member of the SEC’s Cyber Unit, Philip advised the Commission on cryptocurrencies and investigated matters involving initial coin offerings (ICOs), unlawful touting of ICOs, and other violations of the federal securities laws related to cryptocurrencies. Publicly filed enforcement matters Philip spearheaded included the SEC’s first ever Bitcoin-related enforcement action against the operator of Bitcoin Savings & Trust, a Bitcoin-denominated Ponzi scheme, settled proceedings against an operator of a Bitcoin-related social media marketing venture and a popular Bitcoin betting site for the offer and sale of unregistered securities, and settled proceedings against an operator of unregistered cryptocurrency-denominated securities exchanges and broker-dealers.

“The SEC is a principles based regulator, and it will assert its jurisdiction over any securities offering or transaction, as it has done since the onset of the ICO craze, regardless of the technology used to facilitate such an offering.”

Philip’s thoughts on the recent SEC enforcement action against Kik Interactive, Inc. as published in the Crowdfund Insider article “Former SEC Senior Counsel Comments on Kik Ruling: Kik Could Have Benefited From Traditional Capital Markets Lawyer”