Ripple fights SEC’s sneaky post-complaint tactics in XRP lawsuit
Ripple’s opposition highlights a concern that the SEC is attempting to sidestep a thorough legal process by seeking a summary judgment on whether Ripple’s sales of XRP after the complaint constitute investment contracts, rather than engaging in a full legal proceeding to resolve this question.
In the latest twist in the high-stakes legal showdown between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), Ripple has come out swinging against what it deems as the SEC’s overzealous and unjustified demands.
In a bold response, Ripple has vehemently opposed the SEC’s attempt to compel the production of detailed financial documents and contracts related to post-complaint XRP sales.
Ripple claims the SEC missed its boat
Ripple’s countermove is a clear stand against what they perceive as the SEC’s tactless and belated scavenger hunt for information. The crux of Ripple’s argument is twofold: the SEC missed its boat by not requesting this information during the designated discovery period and now, in a desperate move, is reaching for data that Ripple asserts is irrelevant to the case’s remedies phase.
“The SEC seeks to compel Ripple to: (i) produce audited financial statements for the years 2022 and 2023; (ii) produce all post-complaint contracts for the sale or transfer of XRP to ‘non-employee counterparties’; and (iii) answer an interrogatory about the amount of ‘XRP Institutional Sales proceeds’ received after the filing of the Complaint for certain contracts. Ripple opposes these requests for two main reasons. First, they are untimely… 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,” the letter said.
SEC is attempting to sidestep the process, Ripple says
Ripple’s opposition highlights a concern that the SEC is attempting to sidestep a thorough legal process by seeking a summary judgment on whether Ripple’s sales of XRP after the complaint constitute investment contracts, rather than engaging in a full legal proceeding to resolve this question.
This approach, according to Ripple, would unfairly shortcut the process and potentially deprive them of the protections normally afforded in a legal proceeding. Ripple argues that this would lead to a burdensome, drawn-out process resembling a second full-blown litigation, thereby creating unnecessary delays and complicating the case without just cause.
“The SEC apparently wishes to have the Court substitute a summary determination as to whether Ripple’s post-complaint sales constitute investment contracts in place of a full proceeding on the merits to resolve that question,” the letter added.
Ripple won’t fight penalties
Ripple challenges the relevance of its current financial condition in determining the penalties the Court might order. The company clarifies that it is not claiming an inability to pay any potential penalties, and therefore, its current financial status should not influence the decision on the amount of penalty.
Ripple’s argument is that the focus of the court’s decision should be on the conduct in question rather than on the company’s ability to pay. “Ripple’s current financial condition is not relevant to the amount of penalties the Court should order. 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,” said the defendants.
A jury trial in Q2 2024?
This legal battle, stemming from the SEC’s December 2020 lawsuit, accused Ripple of conducting an unregistered digital asset security offering. However, Ripple scored a significant win in July 2023 when Judge Torres ruled that Ripple’s programmatic sales of XRP were not investment contracts. This ruling was a landmark moment, positioning Ripple as a David against the Goliath of regulatory overreach.
As the saga moves towards a jury trial in Q2 2024, the spotlight is on whether Ripple executives facilitated the sale of unregistered securities. This is not just a trial about Ripple; it’s a showdown that could set a precedent for the entire crypto industry. Ripple’s recent pushback is more than a legal strategy; it’s a statement against regulatory overextension and a call for a fair and clear regulatory framework in the crypto space.
The SEC’s latest move and Ripple’s audacious response mark another chapter in this ongoing legal drama. With the remedies phase of the lawsuit in full swing, all eyes are on February 12, 2024, the deadline for the completion of remedies-related discovery.
