Attorneys from the U.S. Securities and Exchange Commission (SEC) have filed a legal motion to compel Ripple to hand over specific documents. This request was made in a filing on January 11 at the U.S. District Court for the Southern District of New York. The SEC is seeking an order from Judge Sarah Netburn that would require Ripple to produce its financial statements for the years 2022 and 2023. Additionally, they want documentation on "post-complaint contracts governing 'institutional sales.'" This request is partly based on a July 2023 decision where a judge ruled that XRP is considered a security only when sold to institutional investors.
The SEC's filing indicates that the requested information is crucial for helping Judge Analisa Torres determine Ripple's responsibility under Section 5 of the Securities Act of 1933. It will also aid in deciding whether to impose remedies such as injunctions or civil penalties on Ripple, and if so, the scale of those penalties. In response, Ripple sought an extension until January 19 instead of the initial January 17 deadline to reply to the SEC’s motion.
The lawsuit against Ripple, its CEO Brad Garlinghouse, and Executive Chairman Chris Larsen, initiated by the SEC in December 2020, alleges that they raised funds through the sale of unregistered securities. In October 2023, the SEC indicated its plan to drop the charges against Garlinghouse and Larsen but continues its legal pursuit against Ripple.
The trial between Ripple and the SEC is set to commence in April. The SEC has also been active in taking enforcement measures against major U.S. crypto exchanges like Coinbase and Binance. Ripple's Chief Legal Officer, Stuart Alderoty, has criticized the SEC, labeling it as an "out of control regulator" due to its approach towards cryptocurrencies.
