Att'y Hogan on Ripple v. SEC_ Real Evidence is Coming Out! Judge Torres Takes Over! Here We Go!!.

It's Friday night and welcome to Legal Briefs. This weekend I got way too excited because stuff is happening in the SEC versus Ripple case. First, we have evidence, some actual beautiful evidence. We will take a look at that. It's evidence for the SEC, just to give you a heads up, but we are going to tear it apart together. And also we have the arrival of Judge Torres, and I have a feeling that she is going to move this case along quick and hard from this point forward. Yes, I know. It's quite an honor. No, I said she's a judge. Really? Welcome back. And are you as excited as I am? First, we have the long awaited rival of Judge Annalisa Torres to the battle. Here she is. No, I'm sorry. That's La Borraquena, a different type of superhero of Puerto Rican ancestry. Here's our hero, Judge Torres. That's her in the middle. She's very petite, but has a big job ahead of her because this case is going to be a bit messy. As you may know, the name you've been hearing up to now, Judge Netburn, is kind of an assistant judge, mainly tasked with discovery issues. But it's Judge Torres who will make the final decisions on the case. And she came into the case guns blasting yesterday. And here is our order. And the order is about three dispositive motions. Right in the first paragraph of the order, you can see that there were requests to seal documents in relation to three pending motions. First, Larson's motion to dismiss the case against himself. Two, Garland House's motion to dismiss the case against him. And three, the SEC's motion to strike the fair notice defense. Now, she's not ruling on these motions, but she is talking about what documents or what parts of documents we, the public, can see. There's two things you can do to documents that are filed with the court. You can seal them or redact them. Now, sealing comes from the olden days, like the 90s, when the court had a paper file and the envelope would be, the documents would be put in, the envelope would be sealed, and no one could open it. Kids, that's something called a manila envelope. And yes, you had to lick it to make it work. The olden days sucked. The other thing that you can do with court documents is you can redact them. And that is where you just black out certain parts on the document. Here, for example, is Mr. Hinman's emails and notes from his speech. Just kidding, that's actually been shredded. But in any case, Judge Torres's order on what we are allowed to see was very generous to us, the public. And here is why. Looking at Roman numeral number one, quote, the common law right of public access to judicial documents is firmly rooted in our nation's history. This presumption of access is based on the need for federal courts to have a measure of accountability and for the public to have confidence in the administration of justice, close quote. So basically, if you want to keep something under seal here, you need to have a good reason. And apparently the judge didn't believe that the defendant's reasons were good enough because a lot of whether they wanted sealed is not going to be. Now, I won't go into details as to each document, but keep in mind that this order does not affect her ruling on the case because the judge sees all of the documents, even those that are sealed. And her order is going to let us see many of the documents that will take place on February 17. And more exciting for us right now is that we immediately got access to three pieces of actual evidence that we can look at. Let me show you how this works in modern times. When you go to look at court documents online, looking at the end of the judge's order on number six, you can see that the judge ordered to unseal the documents at ECF numbers 1721, 1794, and 1795. So here I am on the federal court filing system. You can see that each filing is given a document number that's on the left-hand side. Now, if I go down to, for example, entry number 183, I know that entry number is going to be unsealed on February 17, but right now it's still sealed. So if I click on it, it tells me that I can't access it. But as of today, we have access to 172, 1794, and 5. So let's take a look at it. And if I go to entry 72, there you can see that 172 is still sealed, but I can now access 172-1. And if we click on it and I pay 10 cents a page, nothing is for free. After we click on it, we can now see that the document is the subpoena for Brad Garlinghouse to be deposed before this lawsuit began. Okay. The Brad Garlinghouse subpoena didn't get me too excited. It was just a subpoena, but entries 179, 4, and 5 are very interesting and very important for the SEC. And I want to take a look at them and then show you how the SEC will use them. The first document is an email from Brad Garlinghouse. And it looks like the email was to all Ripple employees. And it was an email way back in June, 2017. And he's summarizing the events of May, 2017 for Ripple. The first thing I'd like to point out to you is that in the second paragraph, he refers to his staff as Ripplers, which I think is very cute. But later on in the email, there's stuff in there that's not so good for Ripple. And that's why it was included and discussed in the SEC lawsuit. In other words, these two documents are part of the SEC's evidence. As we've discussed before, the SEC's argument is that XRP purchasers were looking to Ripple to increase the price of XRP. So in that light, a couple of paragraphs in here are bad. Let's look at it in general. Whenever Ripple talks about increasing the price of XRP, it's not good for it. Let's take a look at paragraph 5 of the email. Quote, despite a proven track record of being good stewards of XRP, we had continued to hear concerns in the market that Ripple could hypothetically sell our 61 billion XRP at any time. So with the decision to lock up 55 billion XRP in escrow, we have given investors a predictable supply schedule, dot, dot, dot, close quote. Okay. So that paragraph made the SEC very happy because Ripple does seem to put out a lot of thought and effort into XRP's price. And also the use of the word investors was unfortunate. However, this email is not as bad for Ripple as you might think initially. And now it's time to play think like a Ripple lawyer. So think about this email and why it's not all that bad for Ripple. Did you get it? Okay. The answer lies in who the email is to. That's right. This email was only sent to Ripple employees, and the issue is whether the XRP purchasers expected Ripple to increase the price of XRP. And you and other XRP holders back in 2017 never saw this email. So it's largely irrelevant to the issue that's going on today. Good job. Well done. But wait, let's look at entry 179.5, the other piece of evidence. This evidence is not as easy. It's an email from Chris Larson to a Mr. Carlos Martins. And Carlos is definitely not a Ripple employee. In fact, his first email to Larson says that he invested about 30,000 euro in XRP, but is thinking he's going to sell it all and get out. At least that's how I read his first email in 2017, which is at the bottom. Surprisingly, Chris Larson actually responds to the guy. I mean, more than 65,000 XRP holders couldn't get any response out of Jared Gensler. Remember kids, no good deed goes unpunished. And as Larson responds to Carlos, let's focus on this part, which was the most relevant part from a legal standpoint. Looking at Larson's response email dated February 6, 2017, quote, we believe XRP is uniquely valuable in the new work we're entering as a bridge currency to initially eliminate inefficiencies in the way payment providers finance payment flows. See white paper. Thus the strategy of focus on connecting banks serves both emerging trends. The more banks connect through Ripple connect and ILP, the more demand we should see for XRP as an asset to reduce liquidity costs. Close quote. I read that part to you because I think it's the best part for the SEC. And again, it's time to play. Think like a lawyer. What do you think about this email? What do you say? Okay. The email is to an outside investor, but there's nothing in the email to which a reasonable person would infer that Ripple is promising to increase the price of XRP, but it's simply a factual statement that demand for XRP will increase as more banks use Ripple products. You got it. That's the argument that there's no promise of a price increase in this answer at all. And now let's switch gear and talk about how exactly will the judge see these emails? How will they find themselves into the pleadings? It just so happens that I'm currently working on a motion for summary judgment in my case, and I can show you exactly where these emails will fit into the SEC motion. Now here's an outline of a motion for summary judgment, which I just changed a little so that you can get a feel. I guess I basically made this outline for the SEC. Mr. Gensler, I'll send you my bill for fees. In a motion for summary judgment, you always start with telling the court what the undisputed facts are. That's Roman numeral number one. Then in part two of the motion, you tell the judge what the law is. I won't bore you with that part, but it's in there. Part three of the SEC outline is the argument that XRP was sold as a security. That's going to be the meat of the motion. And the next sections are used to refute the affirmative defenses, mainly Ripple's fair notice defense and other affirmative defenses. And then finally at the end, you make a conclusion. So the question to you is where will the SEC be referring to these emails in this outline? Yes, very good. Right under the XRP was sold by Ripple as a security part. And these will be the SEC's evidence that XRP purchasers were relying on Ripple to increase XRP's price. I just hope for the SEC that they have more and better evidence than these two documents. But we shall see. These are just two documents that we get to see today and there will be more released on the 17th. And our final takeaway from the judge's order is this. I think we are going to get a ruling on these three dispositive motions very soon. And by that, I mean within a month possibly. In fact, Judge Torres may have already decided and written her orders on two of the three dispositive motions and just needs to figure out what exhibits can be shown or referenced in her order when they are published. This is definitely a housekeeping order and these usually happen when a judge is ready to invite people over to their home to take a look at something. So there is one last brief due on February 9th from Ripple and then hold on to your hats. We could get that long awaited and key ruling on whether the fair defense survives any day now. Exciting times and thank you for sharing them with me. Until next time, I remain yours truly, Jeremy Hogan. You know, in doing these videos, I learn all sorts of things. And did you know that Judge Annalisa Torres's father and grandfather were judges as well? And I just learned that Judge Torres's father sadly passed away just August of last year. Apparently, he was a great leader as well as lawyer who was concerned in 1991 that there was not one Hispanic federal judge in New York. Can you just imagine his pride when his daughter changed all that? Thanks for watching. Then in part two, you tell the judge what the law is. Then in part two, you tell the judge what the law is. Then in part two, you tell the judge what the law. Then in part two, you tell this.