SEC Files New Motion to Compel Ripple to Produce Its Financial Statement and Other Docs

The SEC has filed its reply brief to support its motion to compel Ripple to produce its audited financial statement for two years, post-complaint contracts governing institutional sales, and one interrogatory.

Specifically, the SEC seeks Ripple’s audited financial statements from 2022 – 2023 and post-complaint institutional sales contracts. The commission also wants Ripple to respond to an interrogatory regarding how much proceeds it has received from its institutional sales of XRP since the complaint was filed in December 2020.

#XRPCommunity #SECGov v. #Ripple #XRP The SEC has filed its Reply in Further Support of its Motion to Compel.https://t.co/XsJkh6H6g8

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) January 24, 2024

Notably, the latest filing comes days after Ripple asked Magistrate Sarah Netburn to deny the SEC’s motion to compel. As reported earlier, Ripple argued that the SEC’s motion to compel was untimely, adding that the regulator lacks good cause to seek certain post-complaint discovery at this time, having failed to do so during the fact discovery phase of the legal tussle.

The crypto payments company also argued that the SEC’s post-complaint requests are irrelevant to Judge Analisa Torres’ decision on the remedies litigation.

SEC Files Its Reply Brief

In a letter dated January 23, the SEC further provided reasons why its motion to compel should be granted while addressing Ripple’s opposition.

Firstly, the Securities and Exchange Commission described Ripple’s time-barred argument as “spurious.” Per the SEC, the notion that post-complaint facts are irrelevant to determining the remedies litigation is also false.

According to the regulator, courts usually consider post-complaint facts when constructing remedies for violating securities laws.

Furthermore, the SEC argued that if the court allows Ripple to withhold its post-complaint contracts, such a decision would deprive the commission from presenting relevant evidence in the remedies litigation.

“[…] Judge Torres is permitted to consider the full deterrent effect of any penalty and whether to ‘send as strong a message as possible to the investment community’ that securities violations will not go unpunished,” it added.

Ongoing Remedies Litigation

The SEC v. Ripple lawsuit is currently in the remedies-related discovery phase, scheduled to be concluded on February 12, 2024. Once the discovery is completed, the parties are expected to file their remedies-related briefs, starting from March 13 through April 29, 2024.

During this period, the SEC and Ripple would argue for and against a punitive penalty for the defendant’s securities law violation through its XRP sales to institutional investors.

Since the institutional sales at issue are worth $770 million, Ripple could be required to pay a fine up to that amount. Notably, top legal experts like Attorney John Deaton speculated that Ripple could pay less than $200 million as a fine.

However, following the SEC’s latest post-complaint request, top crypto expert Zach Rector stated that Ripple risks paying up to $3 billion in disgorgement if Judge Torres finds its post-complaint institutional XRP sales as securities.


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