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Ripple will have to reveal its financial statements from 2022-2023 in its case against the United States Securities and Exchange Commission (SEC), a Monday court filing revealed.
“At this stage, the Court sees no basis to short-circuit that inquiry by denying access to readily available information that may be probative to the remedy stage,” Monday’s filing, signed by United States Magistrate Judge Sarah Netburn, read.
Another Win For The SEC During a Years-long Legal Battle
Originally filed in December 2020, the SEC’s complaint alleges that Ripple raised $1.3 billion through XRP sales, which the federal agency claims are unregistered securities.
In addition to revealing their financial statements, the crypto payment protocol will have to produce “post-complaint contracts governing ‘institutional sales’” following the SEC’s argument that the District Judge will need to consider Ripple’s conduct following the complaint to determine if an injunction is necessary.
Ripple previously pushed back against that motion, alleging that “its post-complaint conduct has been structured in such a way to comply with the Court’s rulings.”
“The SEC should be permitted to rebut that statement,” the court filing read. “The Court is not convinced that the production of these contracts will result in an improper or costly ‘mini-trial.’”
Ripple To Face Interrogatory on Institutional Sales of XRP, Court Rules
Of equal importance, the crypto payment protocol will have to “answer an interrogatory regarding the amount of XRP Institutional Sales proceeds it received” following the complaint’s filing.
“Ripple appears to agree with this statement of law but contends that its contracts did not obligate the parties to any clear transaction,” the court filing continued. “The controversy before this Court is whether to order Ripple to answer this interrogatory and not what weight to assign to Ripple’s response. Because the SEC has made a sufficient showing that this information may assist the Court in fashioning its remedy, Ripple must respond to the interrogatory.”
“The SEC Went After The Good Guys,” Ripple CEO Says
Regulators and global finance leaders see a link between innovation and regulatory clarity.
Explore the benefits of a compliance-first crypto industry and learn how global collaboration and clear regulations drive innovation.https://t.co/9ralffwOMN
— Ripple (@Ripple) February 2, 2024
Before the news of the latest court ruling, the SEC decided to end its federal securities law case against Ripple CEO Brad Garlinghouse and its Executive Chairman Chris Larsen in October 2023.
“For nearly three years, Chris and I have been the subject of baseless allegations from a rogue regulator with a political agenda,” Garlinghouse said in a statement at the time. “Instead of looking for the criminals stealing customer funds on offshore exchanges that were courting political favor, the SEC went after the good guys.”