The SEC vs. Ripple Legal Battle: Discovery Deadline Approaching
The ongoing legal dispute between the Securities and Exchange Commission (SEC) and Ripple is entering a crucial phase, with the discovery deadline set for February 20. This deadline requires Ripple to provide all relevant documents to the SEC for the case.
Ripple’s Obligation to Produce Sales Contracts
In compliance with a court order, Ripple must submit its contracts for the sale of XRP to institutional buyers, hedge funds, and ODL customers dating back to 2021. These contracts were requested by the SEC in their motion, which was granted by Judge Sarah Netburn.
Ripple has already submitted its financial statements for 2022-2023 and responded to the SEC’s interrogatory about post-complaint proceeds. However, they requested an extension for the discovery deadline due to the challenges faced in collecting and producing the contracts by the original deadline of February 12.
Remedies-Related Discovery Stage
The “remedies-related discovery” stage began on November 9, 2023, allowing both parties 90 days for limited expert discovery related to remedies. This will assist the SEC and the court in determining an appropriate remedy for Ripple’s violation of securities laws through their XRP institutional sales.
After completing the discovery stage, the case will proceed to the “remedies-related briefing” stage. Here, the SEC will present its findings from Ripple’s provided documents to the court. The Commission will then make demands regarding the penalties that should be imposed on Ripple.
Possible Demands from the SEC
The SEC is likely to request a monetary fine against Ripple as part of their demanded remedy. In their motion, they mentioned seeking Ripple’s financial statements for 2022-2023 to assist the court in reaching an appropriate decision.
There is speculation that the SEC may request a fine of $770 million, as mentioned by pro-XRP lawyer John Deaton. Additionally, the SEC might seek an injunction related to Ripple’s institutional sales to ensure compliance with securities laws.
Ripple argues that its post-complaint conduct has been structured in compliance with the court’s rulings. However, the SEC remains skeptical and wants to examine the terms of post-complaint institutional sales contracts to prevent further violations.
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