The U.S. Securities and Exchange Commission (SEC) has revived its legal battle against Ripple Labs by filing a motion to compel the company to produce specific financial documents.
In a filing at the U.S. District Court for the Southern District of New York, the SEC sought an order requiring Ripple to hand over financial statements from 2022 to 2023, along with contracts related to ‘Institutional Sales’ post the filing of the complaint.
This request from the SEC is particularly focused on contracts that encompass information about institutional sales of XRP, following a July 2023 ruling. In this ruling, a judge determined that XRP only constituted a security when sold to institutional investors.
The SEC believes that obtaining these documents is crucial for aiding Judge Torres in deciding the appropriate legal remedies, which may include injunctions and civil penalties, if Ripple is found liable for violating Section 5 of the Securities Act of 1933.
The lawsuit against Ripple alleges that the company, along with its CEO Brad Garlinghouse and executive chair Chris Larsen, engaged in raising funds through unregistered securities. In October 2023, the SEC said it plans to drop the case against Garlinghouse and Larsen, but will continue legal proceedings against Ripple.
The trial between Ripple and the SEC is set to start in April. This lawsuit is part of a broader enforcement campaign by the SEC against major U.S. cryptocurrency exchanges, including Coinbase and Binance. Ripple’s chief legal officer, Stuart Alderoty, has criticized the SEC’s aggressive stance towards the crypto industry, labeling the regulator as “out of control.”
Most recently, the SEC failed to overturn a judge’s recent ruling on Ripple’s sales of its XRP cryptocurrency. The same judge who previously ruled in July that Ripple’s sale of a cryptocurrency token to retail consumers wasn’t an unregistered securities offering, determined that the agency had not presented enough evidence of flaws in the original decision.
The SEC still has the option to appeal Judge Torres’ decision, but it can only do so after the case officially concludes, which is expected after a trial on remaining issues scheduled for next April.
Ripple Labs said earlier this week it plans to repurchase $285 million worth of shares from its early investors and employees. This move, described as a tender offer, places the company’s valuation at $11.3 billion.
