In the ongoing legal dispute between the US Securities and Exchange Commission (SEC) and Ripple Labs, Judge Analisa Torres has sanctioned the involvement of an investment banker declarant, Andrew A. Kunsak.
As stated in court records, Judge Torres of the US Southern District Court has authorized Andrew A. Kunsak from Sidley Austin LLP to serve as an investment banker declarant in the SEC v. Ripple Labs case. This move aims to prevent the disclosure of sensitive information sealed by the court.
“Andrew A. Kunsak of Sidley Austin LLP, located at 787 Seventh Avenue, New York, New York 10019, a member in good standing of this Court, hereby enters an appearance as an Investment Banker Declarant in the above-mentioned case.”
Ripple had previously objected to a similar situation involving an investment banker declarant from a law firm supporting the SEC’s stance. This recent development has raised substantial concerns for the defendants.
Introducing the investment banking declarant is the court’s response to address issues tied to rulings that rejected the SEC’s request to seal documents related to the Hinman speech and Ripple’s bid to protect confidential information regarding its executives’ finances.
The SEC’s Interlocutory Appeal in the Wake of Ripple and the Crypto Industry’s Partial Victory in the XRP Legal Battle
On May 16, the SEC’s effort to keep internal communication records regarding a speech by former director William Hinman under wraps was denied. In his June 2018 speech, Hinman stated that Ether (ETH), Ethereum’s native token, is not a security.
Given that Hinman’s speech contradicts the SEC’s stance in the Ripple case, the SEC sought to seal internal communications, messages, and expert reports post-Hinman’s speech.
Judge Torres, however, rejected the SEC’s argument that sealing these documents is essential for maintaining transparency and openness within the SEC.
While the court ruled for the Hinman Speech documents to be made public, it granted two other SEC requests:
redacting names and identifying information of SEC experts and XRP investor declarants, as well as personal and financial details of the defendants.
The documents were subsequently disclosed in June, including several emails tied to Hinman’s 2018 speech. These emails reveal SEC officials discussing Hinman’s speech, explicitly stating that Ether (ETH) did not qualify as a security. The documents demonstrate that despite receiving differing advice from other SEC divisions, Hinman stood by his speech.
Ripple secured a victory against the SEC last month as the US District Court of the Southern District of New York ruled that the sale of Ripple’s XRP tokens on exchanges and through algorithms did not meet the criteria for investment contracts. However, the court found that the institutional sale of these tokens violated federal securities laws.
Following Judge Torres’s ruling, the SEC filed an interlocutory appeal regarding her decision that programmatic XRP sales do not constitute securities under the Howey Test. The SEC also seeks to suspend ongoing proceedings until its concerns are addressed, including sealing the Hinman documents and utilizing an investment banker, as approved.
