US SEC makes another push toward getting Ripple to disclose institutional sales proceeds
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The US Securities and Exchange Commission (SEC) recently intensified its legal pursuit against Ripple Labs in a recent filing on January 11. Despite Ripple’s partial victory in a years-long court case that was concluded in 2023, the SEC is not giving up its pursuit to prove that XRP is a security.
Now, the US securities watchdog seeks to compel Ripple to provide crucial financial documents. As such, the new filing is just the continuation of the legal case that started in December 2020. At the time, the SEC accused the blockchain company of selling XRP in an unregistered securities offering, and it now seeks documentation that is in Ripple’s possession, and which, according to the SEC, could prove its claims.
US SEC wants Ripple to surrender multiple documents
The new move essentially requests a court order that would force Ripple to hand over the financial statements for 2022 and 2023. Furthermore, the SEC also wants the documents regarding contracts governing sales of XRP to institutional investors.
The regulator also argues that Judge Analisa Torres had identified institutional sales as unregistered securities sales in a pre-complaint period. Additionally, the regulator also wants Ripple to provide answers to a formal written question, known as an interrogatory.
The question revolves around the amount of proceeds that Ripple received from selling XRP to institutional investors after the SEC filed its complaint. However, this also includes contracts that were entered before the official filing of the complaint.
The SEC claims that the documents in question and the interrogatory are crucial for Judge Torres to make an informed decision regarding potential relief, which includes injunctions and civil penalties. Now, the SEC believes that the requested information is fundamental for tailoring an adequate penalty that would effectively deter future violations.
The trial continues in 2024
Ripple responded to the request, arguing against facing injunctions. It claims that the future XRP sales are exempt from registration, as well as securities laws. However, the SEC countered the argument by stressing the importance of the requested information for deciding on the right penalty.
The filing said: “Ripple intends to tell the Court that even though it generated more than $729 million in illegal pre-Complaint Institutional Sales profits, it intends to comply with the law going forward—and therefore the Court need not enter an injunction. But Ripple does not get to make that determination. The Court does.”
With the SEC’s new move, the legal battle between the two entities continues, officially entering its fourth year. After the court case began in December 2020, Judge Torres finally made the ruling in July 2023, mostly in favor of Ripple, stating that certain sales were not security offerings.
However, that did not include institutional sales, in which case the ruling favored the SEC. Then, in October 2023, it appeared that the dispute would finally reach its conclusion, after the regulator dropped the charges against both Rpple and its two executives. However, the case remained open, as Judge Torres issued a summary judgment on several other remaining matters in December 2023, with the trial now expected to start again in April.
