The Securities and Exchange Commission (SEC) has made a significant decision in its favor in the ongoing case against Ripple Labs, the company behind the cryptocurrency XRP. The court granted the SEC’s request to compel Ripple to produce key financial documents and answer a key question about its XRP sales. Here is the Ripple case and the latest details…
SEC took advantage of Ripple case
The SEC filed a lawsuit against Ripple in December 2020, alleging that the company and its executives raised over $1.3 billion through an unregistered, ongoing digital asset securities offering of XRP. Ripple denied the allegations, arguing that XRP is a medium of exchange and not a security. The case has attracted a lot of attention from the crypto community as it could have major implications on the status and regulation of cryptocurrencies in the United States. The court’s decision is a setback for Ripple, as it will be forced to disclose sensitive information that would strengthen the SEC’s case.
According to the court decision, Ripple must submit its financial statements for 2022-2023 to the SEC. The SEC argues that it is necessary to determine the appropriate remedy in the event of a ruling in its favor. Ripple argued that its financial situation was irrelevant and highly confidential. However, the court disagreed and found this information to be potentially probative at the resolution stage.
Ripple has to answer a few additional questions
Ripple must also answer an additional question regarding revenues from corporate XRP sales after the initial complaint was filed. The SEC argues that this information can help calculate any disgorgement, which is the recovery of ill-gotten gains. Ripple objected to this request, saying it was irrelevant and burdensome. However, the court found that the SEC sufficiently demonstrated that this information could assist in preparing an appropriate resolution.
The court also ordered Ripple to produce all post-complaint agreements it had with third parties regarding XRP. The SEC requested this information to show that Ripple continued to offer and sell XRP as a security after the complaint was filed. Ripple claimed that the SEC’s request was untimely and was previously blocked by the court’s decision in June 2021. However, the court showed that the earlier rejection was contextual. He also explained that the expert was committed to his discovery of the merits and was not controlling in the current matter.
Big win for the SEC
The court’s decision will provide access to significant evidence to support its claims against Ripple. So it’s a big win for the SEC. The decision also demonstrates that the court is taking a broad and comprehensive approach to the discovery process. This risks prolonging the case. It also underlines the potential to increase consensus pressure on Ripple. If the parties do not reach a solution before this date, the case is expected to be heard in early 2024.
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