- SEC compels Ripple to produce financial statements and contracts for XRP sales, citing demands as “overly burdensome.”
- Ripple’s legal battle may shape future cryptocurrency regulation and market practices.
The Securities and Exchange Commission (SEC) has taken a significant step in its ongoing legal battle with Ripple, a leading name in the blockchain and cryptocurrency industry.
Magistrate Judge Sarah Netburn granted the SEC’s motion to compel Ripple to produce comprehensive financial statements for the fiscal years 2022-2023, along with contracts related to institutional sales of its native cryptocurrency, XRP, following the initial complaint.
Ripple Seeks ExtensionÂ
The legal skirmish took another turn when Ripple’s attorneys sought a delay in the deadline for submitting documents related to remedies-associated discovery, proposing to push the date from February 12 to February 20, 2024.
They labeled the SEC’s demands as “overly burdensome,” underscoring the immense challenge and effort required to gather and present the requested data within the stipulated timeframe.
Compliance Challenges
Despite Ripple’s commitment to adhere to Judge Netburn’s order, the company has voiced its concerns over the laborious nature of the task at hand. This entails providing detailed records of XRP sales to institutional investors, hedge funds, and On-Demand Liquidity (ODL) clients spanning three years.
Ripple’s stance is that although the process of fulfilling the SEC’s last request for sales contracts over a three-year period is time-consuming, it would not derail the overall timeline of the ongoing legal dispute. This assertion suggests Ripple’s confidence in managing compliance without compromising the case’s progress.
The legal community has been quick to weigh in on these developments, offering varied perspectives on the implications of the extension request and Ripple’s compliance challenges. Bill Morgan, a lawyer with a pro-XRP viewpoint, minimizes the significance of the 8-day extension against the backdrop of the case’s extended duration, which has spanned over three years.
On the other hand, Fred Rispoli, another attorney, interprets Ripple’s resistance to the discovery demands as a strategic move to forestall potential future lawsuits by the SEC concerning post-complaint sales of XRP. Despite the obstacles, Rispoli maintains a positive outlook on Ripple and XRP’s position in the dispute.
This legal confrontation occurs amidst broader regulatory shifts within the SEC, which has recently adopted new definitions and rules for “dealers” and “government securities dealers.”
These changes, poised to affect cryptocurrency liquidity, are scheduled to become effective 60 days following their amendment to the XRPL (XRP Ledger). The implications of these regulatory adjustments extend beyond Ripple, potentially influencing the wider cryptocurrency market’s operational dynamics.