The legal battle between the SEC and Ripple stems from the SEC’s allegation that Ripple engaged in unregistered securities sales, specifically through institutional sales of XRP.
In a recent filing dated January 11, 2024, the US Securities and Exchange Commission (SEC) has requested specific documents from Ripple Labs Inc as part of the ongoing legal proceedings between the regulatory body and the blockchain payments company.
SEC’s Document Requests and Interrogatory
The two main categories of documents outlined in the SEC’s filing include Ripple’s financial statements and contracts governing institutional sales of XRP. The SEC has requested Ripple to provide its audited financial statements for the years 2022 and 2023, along with any quarterly financial statements for 2023.
As highlighted in the filing, this information is crucial for assessing Ripple’s current financial condition, a factor considered in determining the amount of civil penalties and potential injunctions.
In addition, the SEC is compelling Ripple to produce contracts related to institutional sales of XRP that occurred after the SEC’s original complaint. Judge Analisa Torres had previously identified institutional sales as unregistered securities sales and offerings within the pre-complaint period. Understanding the terms of these contracts is essential for evaluating the nature of Ripple’s post-complaint conduct.
Furthermore, the SEC has also asked Ripple to answer a single interrogatory. The interrogatory seeks details regarding the amount of money Ripple made from institutional sales of XRP following the SEC’s complaint filing, but only for agreements made before the complaint.
The SEC justified its request for these documents by emphasizing its relevance to the court’s decision-making process. The documents are seen as pivotal in assessing Ripple’s conduct after being found liable for violating Section 5 of the Securities Act.
The SEC argues that this information is essential in evaluating the likelihood of future violations and tailoring appropriate penalties and relief. Notably, Ripple may have to pay penalties related to its institutional sales of XRP.
Ripple and SEC: Legal Background and Recent Developments
The legal battle between the SEC and Ripple stems from the SEC’s allegation that Ripple engaged in unregistered securities sales, specifically through institutional sales of XRP.
In July 2023, Judge Torres ruled in partial favor of Ripple, stating that certain sales, including programmatic and exchange sales, were deemed not to be securities offerings. However, the ruling also highlighted that Ripple had violated Section 5 by selling approximately $729 million in XRP via institutional sales.
Accordingly, Judge Torres released an anticipated date for the jury trial in an attempt to bring the case to a close. According to an earlier report by Coinspeaker, a jury trial for the SEC vs Ripple case has been scheduled for the second quarter of 2024.
However, the case saw a notable development in October 2023 when the SEC dropped charges against two Ripple executives including CEO Brad Garlinghouse and company’s founder Chris Larsen. Also, the matter largely concluded in December 2023 when Judge Torres issued a summary judgment on certain remaining issues.
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