The legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC) has intensified with the SEC's latest lawsuit, marking the final filing before Judge Analisa Torres of the Southern District of New York deliberates on the relief phase in this landmark case.
ripple vs. SEC: Final step
in it Deposit On May 20, 2024, the SEC filed a comprehensive rebuttal to Ripple's request to seal certain financial documents and other evidence important to the case. The SEC's letter to Judge Torres expresses strong opposition to Ripple's proposal, particularly with respect to the concealment of financial statements and contractual terms that are integral to the court's evaluation of appropriate solutions.
The SEC's opposition relies on the principle of public access to judicial documents, a cornerstone of legal transparency and accountability. Citing Lugosch v. Pyramid Co. of Onondaga, the SEC emphasizes the historical importance of public access, especially in cases involving public interest and regulatory enforcement. “The common law right of public access to judicial documents is firmly rooted in our nation’s history,” the SEC argues forcefully in its brief, highlighting the necessity of transparency for public scrutiny and trust.
While the SEC agreed to fully seal five documents, it objects to the company's request to redact key financial numbers and contract terms mentioned in the remedy deliberations. This includes details that would reveal Ripple's current financial position, recent XRP sales volume, and details of revenue and expenses – all of which are vital to assessing a company's compliance and identifying any potential penalties.
The SEC critically evaluates the seal's motives: “Ripple invites the public to form opinions on the merits of the SEC's positions. It cannot simultaneously conceal from them the evidence on which this position is based,” the SEC stated, Noting the discrepancy in the company's public communications versus courtroom requests.
Ripple's justification for its sealing requests points to the potential harm that public disclosure of sensitive financial details could have on its competitive position in the market. However, the SEC contradicts this by highlighting inconsistencies in Ripple's argument about the importance and sensitivity of the information.
The Commission challenges the claim that sealed information is not relevant, saying: “Once material is considered relevant to the exercise of judicial power, the weight given to the presumption of access must be governed by the role of the material in question in the case.” Exercise of Article Three Judicial Authority.”
The SEC also notes the stagnancy of some information that Ripple wants to seal, arguing that financial details from past years are unlikely to significantly impact Ripple's current business operations. The SEC argues that “outdated business records cannot support the necessary discovery of harm,” strengthening its position on the need for transparency in outdated financial records.
As Judge Torres prepares to issue her ruling, the cryptocurrency industry is watching closely. The risks are remarkably high, with the SEC proposing fines and penalties of up to nearly $2 billion, while Ripple's counteroffer recommends a maximum penalty of just $10 million.
At press time, XRP was trading at $0.53487.
Featured image from Shutterstock, chart from TradingView.com