The long-standing XRP lawsuit between Ripple and the U.S. Securities and Exchange Commission (SEC) just took an unexpected turn with a new demand from the securities watchdog.
On January 11, 2024, the SEC filed a motion in the Southern District of New York seeking to gain access to two vital categories of Ripple’s documents. James K. Filan, a pro-crypto lawyer and former Federal prosecutor, shared the news on X. The SEC’s sights are set on two specific areas:
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Financial statements for 2022 and 2023: This request aims to assess Ripple’s current financial standing, crucial for determining appropriate remedies like injunctions and civil penalties.
Documentation of post-complaint “Institutional Sales” contracts: These contracts are deemed essential in evaluating the possibility of future law violations and crafting suitable remedies.
#XRPCommunity #SECGov v. #Ripple #XRP The @SECGov has filed a Motion to Compel @Ripple to produce (a) its financial statements for the years 2022-2023; and (b) its post-Complaint contracts governing “Institutional Sales."https://t.co/Egc4wpf7UY
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) January 11, 2024
Ensuring Compliance and Protecting Investors
The SEC’s motion emphasizes its pursuit of two key objectives. The documents will aid Judge Torres in determining the appropriate remedial actions, including potential injunctions and penalty amounts, after the court ruling in July 2023 determined that Ripple violated Section 5 of the Securities Act with its institutional sales on XRP.
Understanding Ripple’s post-complaint business activities, particularly its institutional sales, is crucial for assessing the risk of future securities law violations and crafting effective preventive measures.
A Stalemate Between Both Parties
Ripple opposed the SEC’s demands. The company argued that these demands exceed the permitted scope of discovery and that the requested financial documents and contracts are irrelevant to the case’s current “remedies phase” and overly burdensome to provide.
The SEC countered by highlighting the central role of Ripple’s ongoing business conduct, particularly its institutional sales, in determining the need for potential injunctions against future violations. It further emphasized the necessity of understanding Ripple’s financial health to set an appropriate penalty amount.
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The Next Steps in the Lawsuit
With the SEC ramping up its demands and seeking deeper insights into Ripple’s financial picture and post-complaint activities, the XRP lawsuit, which many believed was done, might have gotten some new life. The outcome of this case will significantly impact the crypto industry, and the entire market hopes that XRP comes out on top.
According to Filan, Ripple has filed for an extension of the time required to respond. The company requested two extra days, pushing the date to January 19 before the company answers the SEC’s motion to compel.
The SEC filing a discovery motion was predicted by a legal expert recently, after weeks of silence from both parties on the lawsuit. Now that things have picked up again, it will be interesting to see what happens next.
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