• The SEC has filed a reply brief supporting its motion to compel Ripple to produce key documents in the ongoing legal battle.
• The SEC is particularly interested in Ripple’s audited financial statements for 2022-2023 and post-complaint contracts governing institutional sales, indicating a focus on understanding Ripple’s financial intricacies.

In the latest development of the legal showdown between the U.S. Securities and Exchange Commission (SEC) and blockchain company Ripple, the SEC has filed a reply brief supporting its motion to compel Ripple to produce crucial documents.

The SEC’s primary focus is on obtaining Ripple’s audited financial statements for the years 2022 and 2023, as well as gaining access to post-complaint contracts governing institutional sales. This move suggests a keen interest in understanding the financial intricacies of Ripple’s operations during the specified period.

Furthermore, the Commission has honed in on a specific interrogatory, demanding that Ripple provide information regarding the proceeds it has garnered from its institutional sales of XRP since the SEC filed its complaint in December 2020. This interrogatory seeks to shed light on the financial impact and revenue generated by Ripple’s institutional sales in the aftermath of the legal dispute initiation.

Significantly, the recent submission follows Ripple’s request to Magistrate Sarah Netburn to reject the SEC’s motion to compel. Ripple contended that the SEC’s request was untimely, asserting that the regulator lacks good cause for seeking specific post-complaint discovery now, especially since it did not pursue this during the fact discovery phase of the legal dispute. The crypto payments firm also argued that the SEC’s post-complaint inquiries are unrelated to Judge Analisa Torres’ decision on the remedies litigation.

SEC Dismisses Ripple’s Arguments

In a letter dated January 23, the Securities and Exchange Commission (SEC) responded to Ripple’s opposition, providing reasons why its motion to compel should be granted.

The SEC dismissed Ripple’s time-barred argument, describing it as “spurious.” The regulatory body countered Ripple’s claim that post-complaint facts are irrelevant to remedies litigation, asserting that courts typically consider such facts when formulating remedies for securities law violations.

Additionally, the SEC argued that allowing Ripple to withhold post-complaint contracts would deprive the commission of presenting crucial evidence in the remedies litigation. The SEC emphasized the importance of accessing this information for a comprehensive and fair legal process.

Currently, the SEC vs. Ripple lawsuit hangs in the remedies-related discovery phase, the conclusion of which shall come by February 12, 2024. After the discovery phase, both parties will submit remedies-related briefs from March 13 to April 29, 2024.

This stage will involve arguments from the SEC and Ripple concerning potential punitive penalties for Ripple’s securities law violation related to institutional sales of XRP.

Given the value of the institutional sales in question, totaling $770 million, Ripple could potentially face a fine up to that amount. Legal experts, including Attorney John Deaton, have speculated that Ripple might end up paying a fine less than $200 million.

However, in light of the SEC’s recent post-complaint request, crypto expert Zach Rector has suggested that Ripple might be at risk of paying up to $3 billion in disgorgement if Judge Torres deems its post-complaint institutional XRP sales as securities.