Attorney Jeremy Hogan Talks BIG WIN for Ripple in the SEC v. Ripple _ XRP Lawsuit at Hearing To

Happy Friday and welcome to Legal Briefs Crypto Crash Edition. This is attorney Jeremy Hogan and boy this was a rough week in the crypto world but guess what it's Friday and we made it. This week saw Bitcoin, Ethereum, everything tanked and in the SEC versus Ripple lawsuit we had a for me disappointing ruling on the memorandum of understanding issue. We'll talk about that then of course there was the hearing today which is very important to Ripple's fair notice defense and the bright spot of my week. But first briefly some people have asked me about my cryptocurrency holdings, my personal holdings on Twitter and I don't usually talk about them very much and I don't know how to do the blockchain backer charting magic thing like he does but I did put together a brief montage of my holdings and how they did this week. Jeremy your crypto misery montage is over. Okay coming. It was apple juice mostly I swear. In any case today in the SEC versus Ripple case we heard the hearing on the SEC's motion to pierce the attorney-client privilege of Ripple and its lawyers. We will talk about that and also this week we had the ruling on the SEC sending discovery requests to foreign governments and we'll touch on that as well and also two very important things from the hearing today that you might have missed but I didn't because nothing gets by me. Now first if you were on the hearing call congratulations the capacity maxed out at 4,000 listeners again and the judge again acknowledged the public and press members in attendance. If you listen to the hearing here's an inside joke for me and you. Did you run out to Chipotle for dinner also? Chipotle es delicioso. So there was a ruling from Judge Netburn this week that the SEC could continue to send out formal requests to foreign governments requesting documents from Ripple's business MOU requests. If you recall the SEC was doing this in secret and when Ripple found out they called them out on it so the judge said the SEC could continue the practice but had to tell Ripple what they were doing and what documents they obtained. Now based on this decision in the hearing today I have a much better read on Judge Netburn. Ripple made the argument in part that the SEC was using bullying tactics not available to it as a private litigant that the SEC was trying and this is obviously true in my opinion. Litigation is war and this is not uncommon. Now I litigate against insurance companies and if they know my client is in bad financial condition they will absolutely drag out the case make us spend more money in order to get my client to accept a lower settlement. It's a nasty business litigation. But Ripple didn't have any evidence of that it was an assumption and the judge said nope I'm not going to rule based on assumptions without evidence which brings us to the hearing today. First let me say how disappointed I was that Garland House's attorney Matt Solomon didn't argue today. He's so cool. All the other attorneys are like good afternoon your honor it's such a such a such and he's like hey judge it's Matt how's it going. Love that guy. Anyways the issue presented was whether the SEC can get its greedy little hands on opinion letters from Ripple's lawyers to Ripple as to whether XRP is a security or not. Now we learned today from the SEC's argument its oral argument that Ripple has already given the SEC two lawyer letters from 2012 and 2015 and at least the 2012 letter says be careful this XRP thing could be considered a security. Now why is that important because Ripple has two viable strong defenses. One that XRP is not a security of course and two even if it is a security Ripple lacked fair notice that it was a security and therefore is not liable. The more this litigation goes on the more important I think the fair notice defense is. Certainly we can know that the SEC just wants to keep it simple. Is it a security or is it not a security case? Meaning the SEC is nervous about the fair notice defense for good reason. So the hearing today was super important because the fair notice defense puts the SEC on trial so to speak because a fair notice defense looks at what the SEC did and didn't do and what effect that has on companies that they have jurisdiction over. And the SEC wants to get the other lawyer opinion letters because it wants to be able to say that Ripple had fair notice from its own lawyers no matter the ambiguities coming from the SEC. And the SEC had some case law on its side. I'm sure the SEC lawyer thought it very clever to rely in part on the Scott v. Chipotle case because that was a decision by Judge Netburn herself. In that case quote the court concluded that Chipotle had received legal advice on the very legal question it had asserted good faith over and that fairness required that such communication be disclosed. So in that case she had forced Chipotle to hand over its lawyer opinions and that was Judge Netburn. But alas I think being cute might have backfired on the SEC in this case because the judge knew the case very well since she wrote it. Right at the beginning of the hearing before the SEC even started she began with the question do you have any cases that say that a fair notice defense is a subjective test. Well I knew right there where things were heading at that point because the fair notice defense is an objective test. If the fair notice defense stems from the constitutional right to due process and from the Upton case quote due process requires that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited close quote. Now that is an objective standard what a normal person would know not what a lawyer thinks or Garlinghouse or any particular person that's all irrelevant. What is relevant to the defense is what a regular normal market participant would know. Now a subjective test acts would ask what the defendant knows. Did Ripple sell XRP thinking it wasn't a security? Did Garlinghouse know? Did Larson know? In that case what their lawyer told them is very relevant and therefore the SEC can get it. So when the judge asks right away do you have any case authority that a fair notice defense is a subjective test that's kind of like asking do you have any case authority that Texas is not a part of the United States. I knew it was not going to go well for the SEC because at least for now Texas is a part of the United States and we love them despite its birthing of the Dixie Chooks. We forgive you Texas. In any case what occurred over the next 45 minutes was the SEC attorney trying to argue that Ripple was attempting to really plead a good faith defense which is a subjective test and call it fair notice and he really tried to his credit he didn't give up like probably I would have. But this takes us back to what we have learned about Judge Netburn from the MOU hearings and rulings. She is not going to let you have her follow breadcrumbs down that trail. This judge wants hard evidence or she's not going to follow you on down that road and I don't think she'll follow SEC down this road either. My prediction motion denied. But two other more subtle important things from this hearing that I want to tell you about. Like I told you before I listen extremely closely to what the judges say. I don't really pay too much attention to the and here's what I heard. The most important pending motion in this case is the SEC's motion to strike or throw out the fair notice defense. Now that would be a big blow to Ripple if that happened. I listened to when the judge described the defense itself. She said something to the effect that the defense is an issue of whether there was a lack of clarity on the SEC's part. It was exactly what I wanted to hear because it shows she has kind of bought into what the defense is all about. There are other ways you could say that and because she chose to say it the way that Ripple probably would have said it. I would suggest that is a good sign as to whether the fair notice defense will survive. Now finally the SEC attorney let out that the Ripple attorneys told him that Ripple intended to file for summary judgment on its fair notice defense in August. Now this is even before the close of the discovery and it's much faster than I expected and it makes me think they might even set the hearing on that defense for summary judgment before even the hearing on whether XRP is a security or not. A Ripple victory at that hearing would of course end the whole case. Would XRP have clarity then? Well yes and no. XRP's status would not but no one could be sued after that by the SEC because then there would be case precedent that no one had fair notice anyways. So you could say it's potato, I could say it's potato, but anyway there would be no more actions by the SEC on this issue. It's been a rough week but always remember the sun will come out tomorrow. Fetch your bottom XRP. Thanks for watching.