- Ripple Labs has strongly opposed the U.S. SEC’s recent motion to compel audited financial statements and post-complaint details in the ongoing lawsuit.
- Ripple argues that the SEC’s requests are irrelevant, lacking good cause, and hold no bearing on the court’s determination of remedies, while legal experts suggest the move signifies Ripple’s strategic challenge to the SEC’s narrative and highlights inconsistencies in the regulatory body’s approach.
In the ongoing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), Ripple has fired back at the SEC’s recent attempt to compel audited financial statements and details regarding post-complaint transactions. The SEC’s motion, filed on January 19, sought information on contracts for the sale or transfer of XRP to “non-employee counterparties” and the amount of “XRP Institutional Sales proceeds” received after the lawsuit filing.
In response, Ripple has vehemently opposed the SEC’s motion, presenting two compelling arguments. Firstly, Ripple contends that the SEC failed to request discovery during the open fact discovery phase, and it now lacks good cause for further investigation into post-complaint sales. Ripple argues that the SEC initially asserted that post-complaint conduct was irrelevant to the case, and this stance was only abandoned after Ripple agreed to a resolution.
Secondly, Ripple asserts that the SEC’s requests are irrelevant to the court’s determination of remedies. Ripple argues that considering post-complaint conduct and sales has no bearing on the court’s decision-making process, and the SEC’s attempt to introduce these elements would require a lengthy fact discovery period or a new litigation.
The SEC’s motion to compel is rooted in a July 2023 ruling that classified XRP tokens as securities when sold to institutional investors. However, Ripple’s legal team contends that the SEC’s current move lacks legal significance. Attorney Jeremy Hogan suggests that the SEC’s pursuit of relatively minor discovery disputes indicates a weakening grip on the overall lawsuit.
Moreover, attorney Bill Morgan highlights a potential challenge for the SEC in litigating whether post-complaint sales adhere to the Howey test. He specifically points to issues raised by ODL (On-Demand Liquidity) customers, questioning how such customers expect profits from utilizing XRP.
Ripple’s Defense Strategy Unravels SEC’s Grand Narrative
Legal experts believe that Ripple’s strong opposition to the SEC’s motion indicates a strategic move to challenge the relevance of post-complaint discovery and potentially weaken the SEC’s case. The SEC’s initial position and subsequent changes in strategy have come under scrutiny, raising questions about the regulatory body’s consistency in handling the lawsuit. As the legal saga continues, Ripple’s assertive stance sets the stage for a critical phase in determining the fate of XRP in the regulatory landscape.
