Federal Judge Approves SEC's Request for Ripple's Financial Documents Amidst Ongoing Suit
Summary:
A U.S. federal judge has approved the SEC's motion to request specific financial documents from Ripple, amidst its ongoing lawsuit. This may help determine whether XRP can be classified as a security. Ripple has until February 12 to comply. The SEC has also filed enforcement actions against major exchanges like Coinbase, Kraken, and Binance. In a related event, Ripple executive Chris Larsen's personal XRP wallets were hacked, resulting in the theft of around $112 million in tokens.
The U.S. Securities and Exchange Commission (SEC) has been given the green light by a federal judge to request specific financial records from Ripple. In a document filed on February 5 with the U.S. District Court for the Southern District of New York, Magistrate Judge Sarah Netburn approved the SEC's motion for Ripple to provide financial reports for 2022 and 2023 and contracts pertaining to "institutional sales" - a significant factor in the determination of whether XRP can be classified as security. This could potentially enable the SEC to counter Ripple's assertion that its actions have been in compliance with court regulations since the initial file.
With regards to the court order for post-complaint XRP institutional sales proceedings, Judge Netburn clarified that the matter under discussion is whether Ripple should answer this interrogatory, not the value of Ripple's response. "Given that the SEC has convincingly demonstrated that this information may be of assistance to the Court in its decision-making, Ripple is obliged to reply to the Interrogatory", stated the judge.
In December 2020, the SEC initiated a lawsuit against Ripple and its executives, Brad Garlinghouse and Chris Larsen, claiming they had offered unregistered securities through XRP tokens. In July 2023, a favorable ruling was granted to Ripple, asserting that XRP was a security only when sold to institutional investors. The SEC subsequently attempted to drop its case against Garlinghouse and Larsen, but not Ripple.
Ripple was given a deadline of February 12 by Judge Netburn to comply with the order to provide the requested information. On January 19, Ripple's legal team contested in a letter the SEC's motion for information production, stating that the commission's request was not timely and lacked sufficient justification. The SEC's lawsuit against Ripple is set to begin trial in April.
The SEC has initiated lawsuits against leading U.S. exchanges, including Coinbase, Kraken, and Binance. Ripple's Chief Legal Officer, Stuart Alderoty, has labeled the commission an "unruly regulator" due to their stance on cryptocurrency.
In January, Larsen's private XRP wallets were breached by a hacker, resulting in the theft of about $112 million worth of tokens, marking one of 2024's largest attacks. On February 1, Binance announced it had frozen $4.2 million of the stolen assets.
Published At
2/6/2024 6:51:44 PM
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