On January 11, the US Securities and Exchange Commission (SEC) escalated its legal battle against Ripple Labs, Inc., as it seeks to compel the blockchain company to furnish essential financial records.
This latest development is a continuation of the ongoing legal dispute initiated in December 2020 when the SEC alleged that Ripple’s XRP sales amounted to unregistered securities offerings.
The SEC’s recent filing specifically calls for a court order requiring Ripple to provide its financial statements for the years 2022 and 2023.
In addition, the regulatory body is demanding documents related to contracts governing institutional sales of XRP that occurred after the SEC’s initial complaint.
Significantly, the SEC argues that Judge Analisa Torres had previously determined that institutional sales constituted unregistered securities sales during the pre-complaint period.
Furthermore, the SEC is urging Ripple to respond to a formal written interrogatory concerning the proceeds obtained from institutional sales after the SEC’s complaint, particularly in relation to contracts established before the complaint was filed.
The SEC asserts that these documents and the interrogatory are crucial for Judge Torres to make well-informed decisions regarding potential remedies, including injunctions and civil penalties.
The regulatory body contends that the requested financial information is essential for devising penalties that effectively deter future violations.
Ripple, on its part, opposes facing injunctions, claiming that its future XRP sales are exempt from registration and securities laws.
However, the SEC counters this argument by highlighting the necessity of the requested financial data to determine appropriate penalties that discourage future infringements.
The ongoing legal clash between the SEC and Ripple has witnessed several twists and turns.
In July 2023, Judge Torres ruled in favor of Ripple regarding certain sales, such as programmatic and exchange sales, deeming them non-securities offerings.
Nonetheless, institutional sales were deemed securities offerings, favoring the SEC.
In October 2023, it seemed like the dispute was heading toward a resolution as the SEC dropped charges against two Ripple executives.
However, the case continued to advance, with Judge Torres issuing a summary judgment on specific remaining issues in December 2023.
While the trial between Ripple and the SEC is scheduled to commence in April, the recent SEC filing requesting additional information indicates the regulatory body’s intent to pursue penalties against Ripple.
Ripple’s Chief Legal Officer, Stuart Alderoty, has previously criticized the SEC, characterizing it as an “out of control regulator” due to its stance on cryptocurrency.