The SEC requests that a judge order Ripple to provide financial statements

Written by Rock Buivy

Post Date: 22 Jan, 24

A move has been filed in federal court by attorneys for the United States Securities and Exchange Commission (SEC) in an effort to require Ripple to provide specific documents pertaining to its enforcement action.

The SEC asked Judge Sarah Netburn to issue an order compelling Ripple to disclose financial statements from 2022 to 2023 and “post-Complaint contracts governing ‘Institutional Sales,'” in a file made on January 11 in the U.S. District Court for the Southern District of New York.

As stated to the commission, the contracts that included details on institutional sales related to a July 2023 court decision that stated the XRP cryptocurrency was only eligible for securities classification when sold to institutional investors.

According to the filing, “The SEC requests this limited and targeted discovery to aid Judge Torres in determining whether the Court should impose relief such as injunctions and civil penalties, and, as to the latter, in what amount, having found Ripple liable for violating Section 5 of the Securities Act of 1933.”

The SEC’s emphasis on a “limited and targeted discovery” reflects a meticulous approach to uncovering the specific details of Ripple’s actions, shedding light on the intricacies that surround the alleged violations.

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Ripple vs. SEC: A Legal Saga Unfolds – Lawsuit Update, Upcoming Trial, and Regulatory Tensions

In December 2020, the SEC launched legal action against Ripple, CEO Brad Garlinghouse, and executive chair Chris Larsen for allegedly raising money through the use of unregistered securities.

In October 2023, the commission filed a notification stating that it will pursue the case with the cryptocurrency firm but dismiss the lawsuit against Garlinghouse and Larsen.

The SEC trial for Ripple is expected to start in April. Other significant U.S. exchanges, including as Coinbase and Binance, were the targets of enforcement actions brought by the commission.

Because of its stance on cryptocurrencies, Stuart Alderoty, the chief legal officer at Ripple, has called the SEC a “out of control regulator.”

The SEC’s focus on contracts describing institutional sales is particularly noteworthy because it is a factor closely related to a significant court ruling that is expected in July 2023.

The decision, which held that XRP could only be categorised as a security if it was offered to institutional investors, highlights the regulatory attention that is focused on Ripple’s business methods.

In its petition, the SEC describes this discovery as “limited and targeted,” implying that it was done on purpose to help Judge Torres consider his options for relief.

It calls into question the regulatory body’s thinking behind the injunctions and civil penalties, particularly in view of their earlier conclusion that Ripple had violated the 1933 Securities Act’s Section 5.

As the legal saga between the SEC and Ripple unfolds, the recent filing by the SEC for specific documents underscores the intricacies of the regulatory scrutiny surrounding cryptocurrency practices.

The requested information not only spans Ripple’s financial landscape but delves into the nuances of institutional sales, aligning with a crucial court decision that shapes the narrative.

The SEC’s pursuit of this “limited and targeted discovery” signals a strategic approach, aimed at aiding Judge Torres in navigating the complexities of potential relief measures.

In the coming weeks and months, the courtroom drama is poised to intensify as the SEC and Ripple engage in legal deliberations.

The outcome of this case holds significance not only for the parties involved but for the broader cryptocurrency landscape, as it navigates the delicate balance between innovation and regulatory oversight.

As the legal proceedings advance, the industry watches closely, anticipating how this pivotal case may influence the future regulatory framework for cryptocurrencies in the United States.

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