Ripple Challenges SEC Request For Financials, Calls It Irrelevant

Table of Contents

Ripple lawyers have challenged the Securities and Exchange Commission’s request to examine additional financial documents, calling it untimely and irrelevant. 

Lawyers representing Ripple argued that the SEC had enough chances to obtain the documents it needed before the deadline. 

Ripple Challenges SEC Request 

Lawyers for Ripple argued that the deadline had already passed and that the material was not relevant to the upcoming trial, which is set for April. The Ripple team, in a January 19th filing, stated that the Securities and Exchange Commission had changed its stance on the collection of additional information during the trial’s discovery phase. The discovery phase required each party to share relevant documents with each other. 

However, last week, the Securities and Exchange Commission demanded Ripple produce audited financial statements for 2022 and 2023. It also asked Ripple to disclose all contracts related to the sale and transfer of XRP that were made to entities after the initial filing and provide details on the institutional sale proceeds from XRP. However, the deadline to request material during the discovery phase ended in August 2021. 

“In fact, the parties already have litigated whether post-complaint discovery was proper, and in the course of that discovery dispute, the SEC never argued that post-complaint discovery was relevant to remedies but instead took the position that post-complaint conduct was entirely irrelevant to the case.”

Reason For Requesting 

The reason behind the SEC requesting post-complaint documents is related to the court decision on the penalty for XRP sales to institutional investors. The SEC could attempt to prove that Ripple continued to breach securities laws even after the filing of charges. If Ripple breached securities laws after the July 13th court ruling, Judge Analisa Torres could hand out a more punitive penalty. However, Ripple argued, stating, 

“The SEC has failed to justify each of its requests on the merits. They are irrelevant: the information the SEC seeks has no bearing on the court’s remedies determination. The SEC apparently wishes to have the court substitute a summary determination as to whether Ripple’s post-complaint sales constitute investment contracts in place of a full proceeding on the merits to resolve that question.”

Ripple’s legal team urged the court not to be swayed by the SEC and what it is attempting to portray against the company. 

“The Court should not go down the slippery slope the SEC is paving. And lastly, as to the SEC’s interrogatory in particular, the SEC has used all of its interrogatories in the case and cannot unilaterally grant itself more.”

The SEC-Ripple trial is set to begin in April. The regulator filed charges against Ripple in 2020, accusing it of raising funds through the sale of unregistered securities. Ripple secured a partial victory against the SEC in 2023 when the judge ruled that XRP is not a security.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.