SEC v. Ripple: Judge could order monetary sanctions if SEC remains uncooperative

Rick Steves

“Despite that repeated instruction, the SEC persists in refusing to search an obvious repository for responsive evidence on external communications”.

The never-ending legal saga between the SEC and Ripple has had a new development: Ripple Labs has filed a motion to compel the Securities and Exchange Commission to turn over internal documents regarding cryptocurrencies BTC, ETH, and Ripple’s XRP.

The motion to compel the financial watchdog to hand over the documents follows a back and forth between the two parties and Judge Netburn.

The SEC has been refusing to produce the records despite Judge Netburn’s insistence. She has told the plaintiff to turn over the documents twice already, but not a single document has been delivered.

“The Court has ordered the SEC to “search all of the relevant repositories for documents and discovery” for communications between the SEC and external third parties relating to XRP, bitcoin or ether. After the SEC resisted, the Court reaffirmed that “the SEC must produce communications with third-parties, including external agencies and market participants.”

“Despite that repeated instruction, the SEC persists in refusing to search an obvious repository for responsive evidence on external communications”, the defendant said.

Ripple’s motion asks the court to order the SEC to search for and produce documents about bitcoin, ether, and XRP from the SEC’s FinHub electronic mailbox, and produce the SEC’s trading policies related to digital assets and virtual currencies no later than June 18, 2021.

Given the SEC’s most recent request to the court – to extend the deadlines for both fact and expert discovery by 60 days – it seems that the SEC is looking to stall the case, Ripple argued.

“The SEC has repeatedly delayed its production, while telling Judge Torres that the ordered discovery was “irrelevant and needless,” and asking the Court to extend the discovery deadlines based, inter alia, on the fact that Defendants “have raised a number of concerns regarding the SEC’s review and production of internal documents and communications responsive to Judge Netburn’s April 6, 2021 order.”

“In other words, the SEC cites its own delay as a reason for extending the schedule. The only way to solve this problem is with a strict deadline”, the motion stated.

It should be noted that the Judge can order monetary sanctions against the Securities and Exchange Commission or even dismiss the case altogether should the plaintiff remain uncooperative regarding the ordered discovery. A dismissal, however, is highly unlikely at this stage.

In its request to extend the deadlines, the SEC admits the “defendants do not consent to the SEC’s request because they contend that the SEC had sufficient time to investigate this matter before filing suit and because Ripple wants to move for summary judgment as soon as possible.”

In addition to this SEC’s request, both parties have filed a joint motion to extend the time until June 9, 2021, to meet and confer regarding document redactions and sealing of certain exhibits hoping “to avoid burdening the Court with unnecessary disputes”.

A few days ago, the court denied the SEC’s motion to compel Ripple to produce memos discussing XRP sales with the firm’s lawyers – a motion that Ripple Labs argued went against the rules of attorney-client privilege. This was an important win for Ripple.

Attorney Jeremy Hogan has most recently published a video explaining how a settlement between the SEC and Ripple would look like.

Read this next

Digital Assets

AAX ranked world’s second largest spot exchange, only behind Binance

Crypto trading volumes experienced their first surge in activity since March as the majority of digital assets began their recovery from the recent grim price action, according to a new report by Cryptocompare.

Digital Assets

Bitpay teams up with Cardlytics to provide 15% cashback rewards

Crypto payment service provider Bitpay announced a partnership with Cardlytics Inc (NASDAQ:CDLX), which it says will offer more rewards for BitPay cardholders on its platform.

Digital Assets

BlackRock digs further into crypto with spot bitcoin private trust

BlackRock, the world’s largest asset manager with almost $8 trillion in AUM, has launched a spot bitcoin private trust for institutional clients in the United States.

Digital Assets

SEC fines Bloom Protocol, orders refund to BLT token purchasers

Blockchain startup Bloom, which raised $30 million in funds via an initial coin offering (ICO), has agreed to return the money to token purchasers and pay a $300,000 fine, the SEC announced.

Institutional FX

FX volume takes step back at Singapore Exchange in July

The Singapore Exchange (SGX), the country’s paramount exchange operator, has released its monthly volumes across its FX, derivatives and commodities segments for July 2022.

Market News

The Week Ahead: 12 August from David Madden, Market Analyst at Equiti Group

There was a spike in volatility last week when the US CPI report ticked down to 8.5% from 9.1%, missing the forecast of 8.7%. The announcement led to chatter the Fed might not carry out a 0.75% interest rate hike in September.

Digital Assets

Pomelo Pay adds crypto payments capabilities from TripleA

According to a June survey conducted by Deloitte, nearly 75% of retailers plan to accept either cryptocurrency or stablecoin payments within the next two years.

Executive Moves

Talos appoints “boss, mentor, and friend” Neal Pawar as strategic advisor

“Foundational technologies are needed for institutions to fully embrace this potential, however, and in my opinion Talos’s platform is steadily becoming the de facto industry standard for digital asset trading.”

Technology

Avelacom enhances Middle East connectivity amid new market trends

Avelacom found that smaller markets in the region were not sufficiently covered by third-party vendors.

<