A US district court just ruled in favor of the motion filed by the US Securities and Exchange Commission (SEC) in the lawsuit it filed against Ripple Labs. Now, the company is required to furnish the arbitrator with its financial statements from 2022 to 2023 and every contract pertaining to the institutional sales of XRP.
The Issue
The latest point of contention of the parties was the motion submitted by the US SEC in court requiring Ripple to hand over contracts and information regarding its institutional sale of XRP. It also demanded the financial statements of the firm covering 2022-2023.
Ripple tried to thwart the attempt of the regulator to peek into its financial health as it deemed it untimely and irrelevant to the case. Despite that, New York District Judge Analisa Torres gave in to the request of the SEC as she saw “no basis to short-circuit that inquiry by denying access to readily available information that may be probative to the remedy stage.”
Adding salt to the wound was the judge favoring the post-complaint of SEC, which sought the determination of “whether an injunction is necessary and just” in the institutional sale of XRP.
The Background of the Case
Ripple emerged in the financial technology (FinTech) realm back in 2012. It carried with it a promise of a token that would allow people and financial institutions access to a real-time and cheap cross-border money transmittal. That’s where the XRP managed by RippleNet comes into the picture.
In 2013, XRP was used by Ripple to raise funds to pump up its operation. As a result, it went under the radar of the SEC. This eventually led to a lawsuit asserting that the sale of XRP in the US and worldwide to raise funds for Ripple constituted an unregistered security offering. Even Ripple co-founder and former CEO Chris Larsen and current CEO Brad Garlinghouse were dragged into the fray because they were allegedly involved in unregistered XRP transactions worth $600 million in their personal capacity.
The respondents cited the lack of fair notice about the classification of XRP as security in their defense. They also questioned the lack of regulatory clarity and guidance governing their digital transactions.
This dragged on with some maneuvering from both parties, hoping to one-up each other or arrive at a compromise at some point. With no immediate end in sight though, SEC and Ripple filed a motion for summary judgment.
Ripple gained a partial win in the case when Judge Torres ruled that the sale of XRP in crypto exchanges wasn’t within the jurisdiction of security laws. However, the court sided with the SEC’s claim on the sale to institutional investors.
XRP Now
As of 6:00 AM today, XRP is trading at $0.5044, which displays a 0.21% gain on the 24-hour chart. During the lead-up to the development of the SEC vs Ripple case, it hovered between $0.5014 and $0.5129 while trading volume increased by 34% as $787.96 million worth of the token moved in wallets and exchanges.