The legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple continues. A recent scheduling order issued by Sarah Netburn, a Magistrate Judge in the Southern District of New York, pertains to Ripple’s motion to exclude new expert evidence presented by the SEC.
A Clash Over Remedies
The case is currently in the remedies phase, following the conclusion of the main arguments. This stage determines the potential consequences for Ripple’s alleged violations of securities laws with its institutional XRP sales.
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The SEC has submitted a motion for remedies and entry of final judgment, seeking disgorgement (repayment of allegedly ill-gotten gains), prejudgment interest, and civil penalties totaling almost $2 billion.
Ripple strongly opposes the SEC’s proposed remedies. In a previous filing, the company argued against disgorgement, prejudgment interest, and excessive civil penalties. Notably, Ripple maintains that the penalty should not exceed $10 million.
Dispute Over Expert Witness Disclosure
A new point of contention has arisen regarding expert witnesses. Ripple has filed a motion to strike new expert materials introduced by the SEC in support of its remedies motion. These materials consist of a declaration and supporting exhibits prepared by Andrea Fox, an Assistant Chief Accountant within the SEC’s Division of Enforcement.
Ripple contends that the SEC failed to disclose Ms. Fox as an expert witness during the designated discovery period. This lack of disclosure, according to Ripple, prevented them from properly deposing Ms. Fox and could lead to expense and delay if discovery needs to be reopened for this purpose.
Ripple argues that the SEC had an obligation to identify Ms. Fox as an expert witness before the close of discovery. They assert that labeling her as a summary witness does not absolve the SEC of this responsibility. Consequently, Ripple urges the court to exclude Ms. Fox’s declaration due to the SEC’s untimely disclosure.
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Impact and Lawsuit Timeline
The court’s decision on Ripple’s motion to strike will determine the scope of evidence considered during the remedies phase. The SEC has until April 29 to respond to Ripple’s motion. Following the SEC’s response, Ripple will have three business days to submit a final reply.
This lawsuit holds significant implications for the crypto industry, as the court’s final decision on remedies could set a precedent for how regulators approach unregistered securities offerings. However, the crypto world is confident that the recent nomination of Judge Sarah Netburn could create a favorable environment for Ripple.
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