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Marty Flumenbaum Discusses Ripple Win Against SEC With Law360
October 27, 2023
Litigation of counsel Marty Flumenbaum spoke with Law360 about the Paul, Weiss team’s recent victory against the SEC on behalf of Ripple co-founder and Executive Chairman Chris Larsen. In “How Ripple Execs' Grit & Litigation Forced SEC To Back Down,” published on October 27, Marty discusses the various factors that went into the SEC’s rare voluntary dismissal with prejudice of aiding-and-abetting claims against Larsen and Ripple CEO Brad Garlinghouse, who was represented by co-counsel.
The SEC’s voluntary dismissal and decision to forgo an upcoming trial was “even better than a trial victory because it's not appealable," Marty says. If the trial had gone ahead, the SEC would have had to prove that Larsen and Garlinghouse aided and abetted Ripple in unregistered securities sales of digital asset XRP to institutions, and show that the executives acted with knowledge of the violation or acted recklessly.
“It created a knowledge requirement on behalf of the individuals, which the evidence just never permitted," Marty notes. "It was a claim that they just could not possibly win.”
Another factor was that the SEC’s internal records, which the agency was ordered to turn over in discovery, showed confusion within the SEC over whether a digital asset was a security, weakening the SEC’s claims, Marty adds. The final nail in the coffin was Larsen and Garlinghouse’s willingness to go to trial to vindicate themselves, which allowed the Paul, Weiss team and co-counsel to move quickly, he says.
“We made it very clear that we were pushing to trial and made it very clear that we were not going to adjourn the trial date that the court set and the pretrial proceeding dates that the court set,” Marty says. “That was done to put the pressure on the SEC to either go to trial or to abandon its claims, and they abandoned their claims.”
In addition to Marty, the Paul, Weiss team included litigation partners Mike Gertzman and Meredith Dearborn, and associates Kristina Bunting, Sarah Prostko, Michael Pisem, Eli Adelman, Connor Ritschard and Jacob Humerick.
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