A federal judge has issued an order permitting the U.S. Securities and Exchange Commission (SEC) to request specific financial records from Ripple.
Magistrate Judge Sarah Netburn, in a filing on February 5 in the U.S. District Court for the Southern District of New York, granted an SEC motion seeking Ripple’s financial statements for the years 2022 and 2023, along with contracts governing “institutional sales” — a focal point in determining whether XRP qualifies as securities.
Judge Netburn emphasized that the court's decision pertains to whether Ripple should respond to the interrogatory, rather than evaluating the weight of Ripple’s response. The requested information, particularly concerning proceeds from institutional sales, could assist the court in formulating remedies, thus necessitating Ripple's compliance with the inquiry.
The SEC initiated legal action against Ripple and its executives Brad Garlinghouse and Chris Larsen in December 2020, alleging the offering of unregistered securities. A judge ruled in favor of Ripple in July 2023, determining that XRP was not a security when sold to institutional investors. While the case against Garlinghouse and Larsen was dismissed, Ripple's case remains unresolved.
Judge Netburn set a deadline of February 12 for Ripple to adhere to the information order. In a letter dated January 19 opposing the SEC’s motion, Ripple’s legal team contended that the request was “untimely” and lacked justification. The SEC v. Ripple trial is slated to commence in April.
The SEC has undertaken enforcement actions against prominent U.S. exchanges like Coinbase, Kraken, and Binance. Ripple's chief legal officer, Stuart Alderoty, criticized the commission as a “runaway regulator” due to its cryptocurrency stance.
In January, an attacker breached Larsen's personal XRP wallet, absconding with approximately $112 million worth of tokens, marking one of 2024's largest attacks. Binance announced on February 1 that it had frozen $4.2 million worth of pilfered funds.
