In his affirmative presentation during a May 21 telephonic conference with Magistrate Judge Sarah Netburn, Jorge Tenreiro, a senior trial attorney at the U.S. Securities and Exchange Commission, argued that Ripple’s lawyers had told the company that XRP could be a currency and security at the same time:
They were sophisticated players. They hired at least 12 law firms…Ripple’s supposed confusion has to be tested against what it was actually being told.
As reported by U.Today, the SEC is trying to compel Ripple to produce legal advice it obtained from lawyers regarding XRP's status.
Tenreiro claims that void for vagueness challenges for Howey have been rejected while pointing out that the defendants injected their state of mind into the case:
They have directly inserted their state of mind as part of their defense…
When asked about additional interference into the attorney-client relationships, Tenreiro says it would be “gamer over” for Ripple if it chose not to follow the advice it received from lawyers:
If they received advice and they did not follow, they would lose…What if their lawyer told them, you still have to deal with the SEC? That would be game over for their defense, that they were confused. We don't know what they have given the exchanges... Ripple tells us, what you were thinking is relevant.
He also argues that Ripple used is legal advice to influence trading platforms with the opinions of the lawyers.
Ripple's lawyer Gregory Rapawy claims that the advice Ripple received is not the subject of the defense:
It doesn't matter that we believed and believe that XRP is not an investment contract - it's strict liability. Our defense is fair notice, not on our state of mind.
In response, Tenreiro asked Ripple to withdraw its affirmative defense.
In addition, Rapawy says that Ripple is not resisting the discovery of non-privileged internal documents, adding that both parties’ internal documentations are potentially relevant to the fair notice defense.
Judge Netburn will announce the ruling "as soon as possible":
I'm going to take it under advisement. I will get an order out as quickly as possible.