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SEC Escalates Ripple Legal Battle, Financial Documents


In
a recent filing on January 11, the US Securities and Exchange Commission
(SEC) has intensified its legal pursuit against Ripple Labs, Inc., seeking to
compel the blockchain company to provide crucial financial documents. The SEC’s
move is part of the ongoing legal case, which originated in December 2020 when
the regulatory body alleged that Ripple’s sales of XRP constituted unregistered
securities offerings.

The
SEC’s latest filing specifically requests a court order that mandates Ripple to
produce its financial statements for the years 2022 and 2023. Additionally, the
regulatory body seeks documents related to contracts governing institutional
sales of XRP after the SEC’s original complaint. Notably, the SEC argues that
Judge Analisa Torres had previously identified institutional sales as
unregistered securities sales during the pre-complaint period.

Furthermore,
the SEC is pushing for Ripple to answer a formal written question, known as an
interrogatory, regarding the amount of proceeds received from institutional
sales after the SEC’s complaint. This applies to contracts entered into before
the complaint was filed.

The
SEC contends that these documents and the interrogatory are crucial for Judge
Torres to make informed decisions on potential relief, including injunctions
and civil penalties. The regulatory body asserts that the financial information
requested is fundamental for tailoring a penalty that would effectively deter
future violations.

Future
Compliance Pledged Amid $729M Profit Admission

Ripple,
on its part, argues against facing injunctions, asserting that its future XRP
sales are exempt from registration and securities laws. The SEC counters this
argument by emphasizing the importance of the requested financial information
for determining appropriate penalties to discourage future violations.

“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,” the filing
states.

The
legal battle between the SEC and Ripple has seen various
developments over time. In July 2023, Judge Torres ruled in favor of Ripple on
certain sales, such as programmatic and exchange sales, stating that they were
not securities offerings. However, institutional sales were deemed securities offerings,
favoring the SEC.

The
dispute appeared to reach resolution in October 2023, as the SEC dropped
charges against two Ripple executives. Despite this, the case continued to
progress, with Judge Torres issuing a summary judgment on certain remaining
matters in December 2023.

While
Ripple’s trial with the SEC
is scheduled to begin in April, the recent SEC filing requesting new
information suggests that the regulatory body is poised to pursue penalties
against Ripple. Ripple’s Chief Legal Officer, Stuart Alderoty, has previously
criticized the SEC, referring to it as an “out of control regulator”
due to its stance on cryptocurrency.

In
a recent filing on January 11, the US Securities and Exchange Commission
(SEC) has intensified its legal pursuit against Ripple Labs, Inc., seeking to
compel the blockchain company to provide crucial financial documents. The SEC’s
move is part of the ongoing legal case, which originated in December 2020 when
the regulatory body alleged that Ripple’s sales of XRP constituted unregistered
securities offerings.

The
SEC’s latest filing specifically requests a court order that mandates Ripple to
produce its financial statements for the years 2022 and 2023. Additionally, the
regulatory body seeks documents related to contracts governing institutional
sales of XRP after the SEC’s original complaint. Notably, the SEC argues that
Judge Analisa Torres had previously identified institutional sales as
unregistered securities sales during the pre-complaint period.

Furthermore,
the SEC is pushing for Ripple to answer a formal written question, known as an
interrogatory, regarding the amount of proceeds received from institutional
sales after the SEC’s complaint. This applies to contracts entered into before
the complaint was filed.

The
SEC contends that these documents and the interrogatory are crucial for Judge
Torres to make informed decisions on potential relief, including injunctions
and civil penalties. The regulatory body asserts that the financial information
requested is fundamental for tailoring a penalty that would effectively deter
future violations.

Future
Compliance Pledged Amid $729M Profit Admission

Ripple,
on its part, argues against facing injunctions, asserting that its future XRP
sales are exempt from registration and securities laws. The SEC counters this
argument by emphasizing the importance of the requested financial information
for determining appropriate penalties to discourage future violations.

“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,” the filing
states.

The
legal battle between the SEC and Ripple has seen various
developments over time. In July 2023, Judge Torres ruled in favor of Ripple on
certain sales, such as programmatic and exchange sales, stating that they were
not securities offerings. However, institutional sales were deemed securities offerings,
favoring the SEC.

The
dispute appeared to reach resolution in October 2023, as the SEC dropped
charges against two Ripple executives. Despite this, the case continued to
progress, with Judge Torres issuing a summary judgment on certain remaining
matters in December 2023.

While
Ripple’s trial with the SEC
is scheduled to begin in April, the recent SEC filing requesting new
information suggests that the regulatory body is poised to pursue penalties
against Ripple. Ripple’s Chief Legal Officer, Stuart Alderoty, has previously
criticized the SEC, referring to it as an “out of control regulator”
due to its stance on cryptocurrency.





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