Court orders Ripple to provide financial details on XRP sales
A U.S. district judge has directed Ripple to disclose additional financial information and details about its institutional sales of XRP. This ruling represents a victory for the SEC in its long-standing lawsuit against the blockchain company.
The SEC sued Ripple over three years ago, alleging that the company engaged in unregistered sales of its XRP token. Last year, Judge Analisa Torres of the Southern District Court of New York ruled that while XRP sales to institutional investors constituted unlawful securities sales, “blind bid” sales to retail investors did not fall under this categorization.
On Monday, the court approved the SEC’s request to compel Ripple to provide further information, which is crucial for determining suitable penalties in this case. Ripple is now required to hand over financial statements from 2022 to 2023, along with contracts related to ‘Institutional Sales’ post the filing of the complaint. Additionally, the company must respond to inquiries regarding the proceeds it received from these institutional sales of XRP.
Ripple had previously argued that the company’s financial health was not relevant to the case. However, the court disagreed, stating that denying access to this information would be unjustified, especially as it could be crucial in the remedy stage of the lawsuit.
The judge also supported the SEC’s stance that obtaining these documents is crucial to decide the appropriate legal remedies, which may include injunctions and civil penalties, if Ripple is found liable for violating Section 5 of the Securities Act of 1933.
The lawsuit against Ripple alleges that the company, along with its CEO Brad Garlinghouse and executive chair Chris Larsen, engaged in raising funds through unregistered securities. In October 2023, the SEC said it plans to drop the case against Garlinghouse and Larsen, but will continue legal proceedings against Ripple.
The trial between Ripple and the SEC is set to start in April. This lawsuit is part of a broader enforcement campaign by the SEC against major U.S. cryptocurrency exchanges, including Coinbase and Binance. Ripple’s chief legal officer, Stuart Alderoty, has criticized the SEC’s aggressive stance towards the crypto industry, labeling the regulator as “out of control.”