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SEC Demands Ripple's Financial Details and Institutional Sale Contracts
Last Updated: January 12, 2024
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Key Takeaways
- The SEC has filed a motion demanding Ripple to provide financial statements for 2022-2023 and documents related to institutional sales of XRP.
- This legal action is part of the SEC's broader enforcement campaign against other cryptocurrency firms.
- Ripple's trial with the SEC is scheduled to begin in April, continuing the legal battle that started in December 2020 over allegations of unregistered securities sales.
The United States Securities and Exchange Commission (SEC) is intensifying its legal action against Ripple by filing a motion in the US District Court for the Southern District of New York.
The SEC is seeking a court order for Ripple to provide financial statements from 2022 to 2023 and documents concerning "post-complaint contracts governing "Institutional Sales"."
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This request stems from a July 2023 ruling that designated XRP as a security when sold to institutional investors, a key aspect of the ongoing enforcement action against Ripple.
The SEC's filing elaborates on the necessity of this information:
The SEC requests this limited and targeted discovery to aid Judge Torres in determining whether, having found Ripple liable for violating Section 5 of the Securities Act of 1933, <...> the Court should impose relief such as injunctions and civil penalties and, as to the latter, in what amount.
In response to this motion, Ripple filed a counter-request on January 11th for a two-day extension, moving their response deadline to January 19th.
This development is part of the broader legal battle initiated by the SEC in December 2020, alleging Ripple, its CEO Brad Garlinghouse, and executive chair Chris Larsen used unregistered securities for fundraising. While the SEC dropped its case against Garlinghouse and Larsen in October 2023, it continues to pursue the matter against the crypto firm.
Ripple's trial with the SEC is slated for April, against the backdrop of the commission's broader enforcement actions targeting major US cryptocurrency exchanges, including Coinbase and Binance.
Ripple's chief legal officer, Stuart Alderoty, has criticized the SEC's approach, labeling it as the actions of an "out of control regulator" in the context of cryptocurrency regulation.
The SEC's latest legal move seeks detailed financial records and contracts from Ripple, as part of their ongoing lawsuit over alleged securities violations, highlighting the growing regulatory scrutiny in the cryptocurrency industry.
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