Ripple Labs has stepped up its legal battle with the US Securities and Exchange Commission (SEC) through a lengthy letter to submit in support of her motion initially filed on April 22, 2024. This motion seeks to eliminate the expert testimony submitted by the SEC.
Expert testimony or summary evidence?
Ripple’s action follows the SEC’s April 29, 2024 opposition letter, in which it defended the admissibility of the challenged testimony.
The main dispute between the two sides revolves around Andrea Fox’s statement, which Ripple claims is expert testimony and not merely summary evidence as claimed by the SEC. Ripple states that Fox’s statement applies specialized accounting knowledge to evaluate financial statements and make inferences beyond basic arithmetic. Ripple claims that this clearly meets the requirements of an expert witness as set forth in Federal Rule of Evidence 702(a).
On the other hand, the SEC claims that Fox was required to provide a clear summary of Ripple’s large amount of financial data, which does not require the substantial expertise typical of expert witnesses. They claim that her analysis consisted mainly of basic calculations intended to determine the perception of the data and not to provide expert advice on financial issues.
Timeliness and Disclosure Disputes
Another important concern of Ripple is the timeliness of the Fox statement. Ripple accuses the SEC of failing to name Fox as an expert witness in the court-set schedules, which is done to ensure both sides have a period to respond to evidence presented at the hearing.
Ripple emphasizes that this prevents them from fully conducting cross-examination, which detracts from the fairness of the process. Meanwhile, the SEC counters this argument by claiming that Fox did not need to be documented as an expert since she was a summary witness whose testimony was based on pre-existing data and simple calculations.
Precedents and legal interpretations
Ripple’s response letter points to a number of cases in which courts have struck down statements similar to Fox’s as undisclosed expert testimony disguised as summary of facts. They argue that prior decisions favor their position that failure to properly classify and disclose the nature of a witness’s testimony can mislead both the opposing party and the court, thereby justifying the exclusion of such testimony.
The SEC contradicts this view of the plaintiffs. It compares this case to other cases where summary witnesses were admitted without the need for formal disclosure by an expert. They emphasize that the procedural environment and the content of the testimony dictate the requirement for this disclosure.
What could this mean for the lawsuit?
The outcome of this motion could have serious consequences in the upcoming lawsuit between Ripple and the SEC. If Ripple is successful in removing the Fox statement from the record, it could potentially limit the SEC’s ability to argue for specific penalties implied by the disputed calculations in Fox’s testimony. On the other hand, a successful declaration would strengthen the SEC’s case by providing a basis for its claims against Ripple.
Source: https://cryptobenelux.com/2024/05/03/ripple-vraagt-rechtbank-om-secs-expert-advies-te-verwerpen/
