SEC Demands Financial Statements From Ripple Ahead of Lawsuit Conclusion

YEREVAN (CoinChapter.com) — There have been recent developments in the legal battle between Ripple Labs Inc. and the U.S. Securities and Exchange Commission (SEC). As of Jan 11, 2024, the SEC has escalated its demands in the ongoing lawsuit, specifically filing a motion to compel Ripple to produce two particular types of documents.

Did You know? On Dec 22, 2020, the Securities and Exchange Commission initiated a civil action against Ripple, Larsen, and Garlinghouse. The lawsuit claimed that Ripple should have registered the distribution of the digital asset XRP, dating back to 2013, as a security. The agency then withdrew allegations against both executives.

SEC Demands Ripple Financial Statements

The first category of documents the SEC is seeking are Ripple’s financial statements for the years 2022 and 2023. The purpose of this request is to assist the SEC in determining appropriate remedies, which may include injunctions and civil penalties, depending on Ripple’s financial condition.

The second type of document requested pertains to Ripple’s post-complaint contracts governing Institutional Sales. SEC considers these documents crucial for determining appropriate remedies against Ripple, such as injunctions and civil penalties. The SEC’s focus is on understanding Ripple’s conduct since the original complaint was filed and evaluating the potential for future violations.

Ripple, however, has resisted these demands, arguing that the SEC’s request goes beyond the permissible scope of discovery. Ripple asserts that the request for post-complaint financial documents and contracts is both burdensome and irrelevant to the case’s remedies phase.

The Governmental Agency Disagrees

The SEC counters this by stating that Ripple’s ongoing business activities, particularly its Institutional Sales of XRP post-complaint, are central to determining whether Ripple should be prevented from future securities law violations. Furthermore, the SEC emphasizes the need to understand Ripple’s current financial condition to determine the appropriate amount for any civil penalties.

These developments are part of the remedies phase of the lawsuit. The court will likely complete this phase by Feb 12, 2024. The court scheduled the trial between the SEC and Ripple to commence on April 23, 2024, with the final pretrial conference set for April 16, 2024​.

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