Ripple-SEC Legal Battle: Deadline Looms

The SEC filed a motion to compel Ripple to disclose financial statements and sales contracts, which was granted by Judge Netburn.

As both Ripple Labs and the U.S. Securities and Exchange Commission (SEC) approach the upcoming critical deadline in the case, the legal dispute is intensifying.

The impending deadline in the case, which centers on institutional sales and is initiated by the digital payment protocol and the SEC, is February 20.

Ripple achieved a significant legal victory in July 2023; nevertheless, the Court rendered a decision stating that specific institutional sales of XRP constituted investment contracts, and as such, Ripple was obligated to file an SEC registration.

It is important to note that the digital payment protocol had previously petitioned for a one-week extension of the discovery deadline about remedies from February 12 to February 20, which would have rendered this date the subsequent critical milestone in the legal dispute.

The discovery phase continues to be of utmost importance at this juncture, as it may unveil novel information or arguments that have the potential to influence remedies.

On November 14, as a reminder of events preceding this pivotal chronology, the SEC served Ripple with nine interrogatories and three RFPs.

The SEC filed a motion on January 11 to compel discovery of Ripple’s financial statements for the years 2022 and 2023, post-complaint written contracts governing XRP sales to institutional buyers, hedge funds, and ODL customers, and the proceeds Ripple received for delivering XRP after the complaint was filed, but under written contracts entered into before the complaint, following meetings and discussions on December 21 and January 3 to resolve the dispute.

Judge Netburn granted the SEC’s motion to compel on February 5. Ripple declared its intention to provide accessible financial statements and address the SEC’s inquiry regarding post-complaint profits from pre-complaint contracts by the prior discovery deadline of February 12, 2024, following Judge Netburn’s ruling.

SEC’s Discovery Requests and Ripple’s Response

In contrast, the digital payment protocol requested a temporary extension until February 20 to submit its contracts about the distribution of XRP to institutional purchasers, hedge funds, and ODL clients from a challenging three-year prior period.

The company cited its challenges in gathering and delivering those documents by the initial deadline.

In this instance, Ripple did not request any modifications to the remaining deadlines; they remained unchanged. In March and April of this year, it is anticipated that legal briefs will be filed; the Court will then determine which remedies to enforce.