Ripple Rejects SEC Requests On XRP Financial And Sales Reports

JAKARTA - The crypto company, Ripple Labs, rejected the request of the United States (US) capital market authority, the US Securities and Exchange Commission (SEC), regarding additional information about XRP. Ripple considered the SEC's request irrelevant, late, and groundless.

The SEC filed a lawsuit against Ripple in December 2020, on charges of selling XRP without registering it as a securities or securities. The SEC claims that Ripple has raised more than $1.3 billion (Rp18.5 trillion) through an unauthorized XRP offering since 2013.

Ripple denies the allegations and says XRP is a digital asset, not a security. Ripple also claims that the SEC does not provide legal clarity on XRP status and violates administrative justice principles.

On Friday, January 21, 2024, Ripple sent a letter to Judge Sarah Netburn, who handled the case, rejecting the SEC's request for post-complaint discovery. The post-complaint discovery is a process of collecting evidence after the complaint was filed.

In the letter, Ripple's legal adviser said that the SEC asked Ripple to produce audited financial reports for 2022 and 2023, as well as all post-complaint contracts for sales or transfers of XRP to non-employee third parties. The SEC also demanded Ripple answer questions about the number of XRP institutional sales proceeds received following filing complaints for certain contracts.

Reported by TheCryptoBasic, Ripple rejected the SEC's request for two main reasons. First, the SEC's request was late, because the SEC should have been looking for this information when the fact-finding was still open, but did not. Second, the SEC's request was groundless, because the information the SEC requested had no effect on determining compensation by the court.

Ripple also accused the SEC of seeking shortcuts in investment contract claims, intending to get a quick decision without listening to the full argument from Ripple. Ripple said that this would ignore important facts, increase the risk of the second stage of discovery, and burden disputed parties and courts.

Ripple's legal adviser also highlighted Judge Analysis Torres' decision on July 13, 2023, stating that Ripple's automatic sales of XRP and other distributions are not investment contracts, but XRP's particular institutional sales to individuals and advanced entities should be listed as securities.

Ripple argues that the current financial condition is irrelevant for Ripple to determine the amount of fines to be paid to the SEC. Ripple also confirmed that it would not file an argument to reduce fines based on current financial conditions. The letter concludes with a statement:

"The SEC's request for post-relevant and burdensome post-complaint discovery, especially after the fact-discovery, should be rejected."

Meanwhile, the case between Ripple and the SEC is still ongoing in court. On January 19, 2024, Judge Netburn rejected the SEC's request to issue a warrant to six foreign banks to disclose information about XRP transactions by Ripple executives, including CEO Brad Garlinghouse and founder Chris Larsen.

Judge Netburn said that the SEC's petition did not meet the standards required to issue an international warrant, and that the SEC did not show the relevance of the requested information to its claims. Judge Netburn also said that the SEC's request could violate Ripple's privacy and civil rights.

This case is considered important for the crypto industry, as it can determine the legal status of XRP and other digital currencies in the US. XRP is one of the largest digital currencies in the world, with a market capitalization of around $22.5 billion (Rp320.6 trillion) as of January 23, 2024, according to data from Coinmarketcap.com.