SEC Pressures Ripple for Financial Transparency in Ongoing Legal Saga

In the ongoing legal battle with the U.S. Securities and Exchange Commission (SEC), Ripple is facing increased demands for financial transparency. The SEC has filed a motion to compel the blockchain payments firm to provide its financial statements for the years 2022-2023.

This development adds another layer to a complex case that began with a ruling on July 13, which determined that XRP, Ripple’s originally issued cryptocurrency, is not a security. However, it was found that certain sales of XRP under written contracts are considered securities.

Both Ripple and the SEC had agreed to a joint briefing schedule to discuss remedies following this ruling, setting a deadline of February 12, 2024, for completing related discoveries. The SEC’s latest motion specifically requests information on the proceeds from institutional sales of XRP post-complaint for contracts established before the complaint was filed.

The SEC’s accusation centers around Ripple’s continuous sales of XRP as unregistered securities, from which it allegedly earned billions in proceeds. Ripple counters this by stating its ongoing plans to sell XRP to institutional buyers in On-Demand Liquidity (ODL) transactions, claiming these sales can be structured to comply with federal securities laws.

Responding to the SEC’s demands, Ripple has filed a Motion for Extension of Time, seeking an additional two days until January 19 to prepare its reply. This request for more time indicates that the lengthy legal dispute, now in its third year, is still far from being settled, with both parties bracing for further legal confrontations.

This extension follows the SEC’s decision in October of the previous year to withdraw securities law violation charges against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. Garlinghouse has been vocal in his criticism of the SEC, accusing the agency in November last year of straying from its primary objective of protecting investors.