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SEC Escalates Demands in XRP Lawsuit Against Ripple, Seeking Key Documents (crypto-news-flash)


  • The SEC has escalated its requests by filing a motion seeking access to Ripple’s financial statements for 2022 and 2023.
  • The SEC’s intensified demands also include documentation related to Ripple’s post-Complaint contracts governing “Institutional Sales”.

In the ongoing legal battle between Ripple Labs Inc. and the United States Securities and Exchange Commission (SEC) over XRP, the regulatory agency has intensified its requests. On January 11, 2024, the SEC filed a motion in the Southern District of New York, seeking to compel Ripple to disclose two distinct categories of documents.

#XRPCommunity #SECGov v. #Ripple #XRP @Ripple has filed a Motion for Extension of Time requesting an additional 2 days, until January 19th, to respond to the @SECGov’s Motion to Compel.

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) January 11, 2024

Primarily, the SEC is pressing for access to Ripple’s financial statements for the years 2022 and 2023. This specific request stems from the SEC’s imperative to assess Ripple’s financial standing, influencing decisions on appropriate remedies such as injunctions and civil penalties.

Secondly, the SEC is requesting documentation related to Ripple’s contracts pertaining to “Institutional Sales” post-Complaint. These documents are crucial in the SEC’s efforts to evaluate and determine suitable remedies, including injunctions and civil penalties, in the case against Ripple.

The US SEC Seeks Additional Documents

The SEC emphasizes that these requests aim to assist Judge Torres in deciding whether, after finding Ripple liable for violating Section 5 of the Securities Act of 1933, the court should impose relief and, if civil penalties are warranted, the appropriate amount. The focus is on understanding Ripple’s conduct since filing the original complaint and assessing the potential for future violations.

Ripple has contested these demands, arguing that the SEC’s request goes beyond the permissible scope of discovery. Ripple contends that the request for post-Complaint financial documents and contracts is not only burdensome but also irrelevant to the remedies phase of the case.

In response, the SEC maintains that Ripple’s ongoing business activities, particularly its Institutional Sales of XRP post-Complaint, are central to determining whether Ripple should be enjoined from future securities law violations. The SEC justifies this stance by asserting that the information is crucial to the injunctive relief inquiry, especially since Ripple appears to argue against an injunction based on the belief that its future XRP sales are or will be exempt from registration or the reach of federal securities laws.

SEC Questions Ripple’s Financial Standing

The SEC has underscored the significance of comprehending Ripple’s current financial standing to determine appropriate civil penalties. The recently filed motion accentuates that understanding Ripple’s financial condition is crucial for tailoring penalties that effectively deter future violations.

The motion states, “Ripple’s current financial condition and the actual total amount it received from its violative Institutional Sales is fundamental to tailoring a penalty to deter future violations.” The SEC argues that Ripple’s cooperation in the discovery process for remedies and its submission of a supplemental expert report during this period make its refusal to produce post-Complaint discovery unjustifiable.

The trial between the SEC and Ripple will commence on April 23, 2024, with the final pretrial conference scheduled for April 16, 2024. As the legal proceedings unfold, the SEC continues to press for access to specific documents to facilitate a thorough examination of Ripple’s financial position and determine appropriate penalties.

Chances are that post the court outcome, the US SEC could be approving the spot XRP ETF. Amid this non-clarity, the XRP price performance has remained subdued. At press time, XRP is trading 3.7% down at $0.578 with a market cap of $31.1 billion. Moreover, some analysts are predicting the XRP price to touch new all-time highs this year in 2024.

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