Ripple Labs has opposed the requests by the U.S. Securities and Exchange Commission (SEC) for post-compliant discovery concerning XRP. Ripple argued that the regulator’s requests are “untimely” and “the SEC has failed to justify each of its requests on the merits.” Moreover, the crypto firm stated that “the information the SEC seeks has no bearing on the court’s remedies determination.”
SEC Seeks More Information From Ripple Regarding XRP
In response to the U.S. Securities and Exchange Commission’s motion to compel certain post-compliant discovery regarding XRP, Ripple Labs sent a letter to Judge Sarah Netburn on Friday, firmly opposing the SEC’s requests.
The SEC wants Ripple to produce audited financial statements for 2022 and 2023 as well as all post-complaint contracts for the sale or transfer of XRP to non-employee counterparties. The agency also demands Ripple answer an interrogatory about the amount of “XRP institutional sales proceeds” received after the complaint filing for certain contracts.
In the letter to Judge Netburn, Ripple’s legal counsel explained that the crypto firm opposes the SEC’s requests for two main reasons. “First, they are untimely,” the counsel stated, emphasizing that the SEC “had ample opportunity to seek much of the requested discovery while fact discovery was open, failed to do so, and lacks good cause to do so now.” The counsel continued:
Second, the SEC has failed to justify each of its requests on the merits. They are irrelevant: the information the SEC seeks has no bearing on the Court’s remedies determination.
Ripple asserted that the SEC seeks a shortcut on investment contract claims, aiming for a summary judgment instead of a full hearing, cautioning that this bypasses crucial fact-finding, risks a second discovery phase, and burdens both parties and the court.
The counsel further noted: “Worse, the SEC’s summary procedure would deprive Ripple of protections that would normally apply to a pre-suit investigation of new conduct and the process afforded by the filing of new claims. And lastly, as to the SEC’s interrogatory in particular, the SEC has used all of its interrogatories in the case and cannot unilaterally grant itself more.”
The letter also highlights the ruling by Judge Analisa Torres on July 13 last year, holding in part that Ripple’s programmatic sales of XRP and other distributions did not amount to investment contracts but that certain institutional sales of XRP to sophisticated individuals and entities should have been registered as securities.
Ripple further argued that “Besides being untimely, the SEC’s discovery requests seek information that is irrelevant to remedies.” The counsel stressed that “Ripple’s current financial condition is not relevant to the amount of penalties the Court should order,” emphasizing that “Ripple is not claiming an inability to pay and will not argue in favor of a reduction in penalty amount on account of its present financial condition.” The letter concludes:
The SEC’s request for irrelevant and burdensome post-complaint discovery, especially given the close of fact discovery, should be denied.
Do you think the court should deny the SEC’s requests for post-compliant discovery concerning XRP? Let us know in the comments section below.
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