SEC Seeks Court Order for Ripple’s Financial Statements in Ongoing Legal Tussle

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The legal battle between the SEC and Ripple Labs continues, with the SEC seeking court intervention to obtain Ripple’s financial statements and data on institutional XRP sales.

SEC’s Legal Pursuit of Ripple Continues With Request to Disclose Financials and XRP Contracts

The U.S. Securities and Exchange Commission (SEC) has intensified its scrutiny of the cryptocurrency firm Ripple Labs, Inc. According to a January 11 filing, the SEC is seeking a court order to compel Ripple to produce financial statements for 2022 and 2023, as well as contracts related to institutional sales of XRP, its native cryptocurrency.

The SEC’s request is seeking contracts for sales made after the SEC initially filed a complaint against Ripple. The SEC’s action is based on a previous finding by Judge Analisa Torres that these institutional sales prior to the complaint were essentially unregistered securities transactions.

Additionally, the SEC wants Ripple to provide a formal written response (known as an interrogatory) detailing how much money it earned from these institutional sales after the SEC filed its complaint, but only for contracts that were signed before the SEC’s complaint was filed. The SEC argues that these documents and the interrogatory response are crucial for “tailoring a penalty to deter future violations,” suggesting potential injunctions and civil penalties against Ripple.

Ripple, for its part, maintains that its future XRP sales should not be subject to injunctions as they are exempt from registration and securities laws. However, the SEC’s recent request indicates a persistent pursuit of regulatory oversight, especially following the partial victory Ripple achieved in July 2023 when Judge Torres also ruled that certain sales were not securities offerings.

The legal battle, which began in December 2020 with the SEC alleging Ripple’s XRP sales as unregistered securities offerings, saw a limited resolution in October 2023. The SEC dropped charges against two Ripple executives, leading to the conclusion of most aspects of the case in December 2023. Despite this, the recent filing for new information signals that the SEC is not backing down, and penalties against Ripple remain a possibility.

The SEC’s latest action aligns with its broader enforcement strategy in the crypto industry. Ripple’s chief legal officer, Stuart Alderoty, has previously criticized the SEC for its rigorous regulatory approach, labeling it as an “out of control regulator.”

As Ripple prepares to respond to the SEC’s motion, confidence in the crypto community is high in light of the SEC’s historic spot bitcoin ETF approval. Ripple’s trial with the SEC is slated to begin in April.

Will the SEC be successful in getting injunctions or civil penalties against Ripple? Share your thoughts and opinions about this subject in the comments section below.