Ripple slams SEC bid to shield experts in high-profile crypto case

Representation of the Ripple payments network is seen in this illustration taken November 29, 2021. REUTERS/Dado Ruvic/Illustration

(Reuters) – The U.S. Securities and Exchange Commission has made an “unprecedented” move to keep the names of its expert witnesses under wraps, Ripple Labs Inc said in a filing in the agency’s highly-watched case over the cryptocurrency XRP.

The San Francisco-based company told U.S. District Judge Analisa Torres on Sunday that the SEC had insisted Ripple’s challenges to three SEC experts be filed under seal, until the judge decides whether to shield the opinion of a fourth expert whom the SEC says has faced “threats and harassment.”

The experts play a key role in the SEC’s lawsuit alleging Ripple and its current and former chief executives have been conducting a $1.3 billion unregistered securities offering by selling XRP, which Ripple’s founders created in 2012.

Attorneys in the cryptocurrency sphere are following the case closely as it could have legal ramifications for other digital assets.

Ripple and the executives have denied the allegations, and the company has argued that XRP has traded and been used as a digital currency.

The defendants said in Sunday’s filing that the SEC is “abusing” an order protecting information in the case “to prevent criticism of its experts from reaching the public.”

“The SEC’s attempt to shield the identities and opinions of its experts from any public scrutiny is both unprecedented and unsupported by any evidence of need,” their lawyers wrote.

They asked Torres to let both sides make arguments and then decide whether any information should be shielded.

An SEC spokesperson declined to comment. The agency has implied in filings that a fourth expert, Patrick B. Doody, has been the subject of “anonymous threatening postings on social media.”

Doody’s role in the case became public when six XRP holders, who were granted amicus status in the case, sought to file their own motion challenging his expert report. The SEC has argued in court papers that publicly releasing information about the report could “inflame the discourse and result in further harassment and intimidation.”

Doody did not immediately respond to a request for comment on Monday.

The SEC previously hired Doody to analyse the expectations of token purchasers in its case against Telegram Group Inc.

The case is SEC v. Ripple Labs Inc, U.S. District Court, Southern District of New York, No. 20-CV-10832.

For Ripple: Andrew Ceresney of Debevoise & Plimpton

For the SEC: Pascale Guerrier and Stewart Ladan

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