The U.S. Securities and Exchange Commission (SEC) said in a Jan. 23 court filing that its demands for Ripple's audited financial statements for the last two years were “procedurally proper” and “relevant. ”
Last week, Ripple opposed the SEC's demands for these documents, describing the request as untimely, irrelevant, and unjustifiable. The crypto company further argued that both parties had previously agreed that post-compliant discoveries were unnecessary, and reevaluating this requirement might unnecessarily prolong the proceedings.
SEC response
In response to Ripple's opposition, the SEC highlighted the procedural propriety of its discovery requests, adding that the solicited information was highly relevant and specifically targeted to aid its case.
The financial regulator also pointed out that subsequent developments in the case have clarified the need for further discovery.
“Ripple argues that the SEC’s requests are untimely and cites the initial April 2021 scheduling order (Opp. at 2) as contemplating only one discovery period. Ripple is wrong. Subsequent developments have made clear that this initial order was not the last word on discovery,” SEC wrote.
Moreover, the SEC stressed the relevance of Ripple's financial statement to determine any potential penalty, citing precedents that emphasized a defendant's wealth as a pertinent factor in calculating a penalty aimed at deterring misconduct.
In addition, the SEC stated that Ripple's assertions regarding its post-complaint Institutional Sales contracts are untenable. According to the regulator, the crypto company recently produced similar documents about “all of Ripple's XRP sales contracts from 2020 to June 2023, including determining the identity of the counterparties to those contracts” for an ongoing legal dispute.
Protracted legal battle
Ripple's legal case with the SEC has endured for around four years.
Initially, the financial regulator accused Ripple of conducting unregistered securities offerings through its sales of XRP in December 2020.
However, the crypto company secured a pivotal ruling last year when the judge determined that certain sales of XRP, specifically programmatic and exchange sales, did not fall under the category of securities offerings. But the judge also ruled that Ripple's institutional sales could be classified as securities offerings.
Since this landmark ruling, Ripple and the SEC have become entangled in subsequent legal proceedings as they strive to conclude the case.
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