The US Securities and Exchange Commission (SEC) filed a response to Ripple’s motion application to seal and redact the company’s business details in the parties’ briefings on remedies on Tuesday.
The SEC argued that Ripple’s motion request to “conceal financial and securities sales information” from the public was unlawful, as the details in question were crucial to the requested remedies.
Ripple’s Opposition Tagged as “Unlawful” by SEC
In addition, the SEC contended that Ripple’s redaction requests would obscure public information crucial to the court’s decisions during the remedies phase and the public’s understanding of the penalties.
#XRPCommunity #SECGov v. #Ripple #XRP The @SECGov has filed its response to @Ripple’s Motion to Seal. pic.twitter.com/zH9XYWbSsh
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) May 21, 2024
The details that the SEC wants the firm to make public include the value of Ripple’s current assets (relevant to the penalty amount), recent sales figures (pertinent to injunctive relief and penalties), revenues and expenses (related to disgorgement), and the size of discounts given to some institutional investors (reflecting investor harm).
The financial regulator further argues that Ripple has failed to provide reasonable evidence showing that the disclosure of publicly available information would result in substantial injury warranting protection. Additionally, the SEC notes that some financial details are outdated, and some evidence is publicly accessible.
“Ripple wants to hide the extent to which it offered XRP at discriminatory prices. However, the period when Ripple was offering discounts goes back to 2014 and ended in December 2020,” the US SEC filing explained. “Ripple has not shown how the discounts it offered four years ago and more would matter, particularly since Ripple seeks to avoid remedies by claiming it “has changed the way it sells XRP and changed its contracts.”
It’s worth noting that the SEC is not against keeping Ripple’s recent financial statements a secret. Neither is it opposed to the company’s request to seal the five exhibits in question in their entirety and several of its suggested redactions for remedy briefings.
SEC’s claims that Ripple’s request to “conceal financial and securities sales information” from the public is unjustified and that the financial figures or specific terms used to justify remedy requests should be public pic.twitter.com/BP84QCz24b
— Sherrie 🌸 (@CherryEmpress21) May 21, 2024
It strongly opposes the company’s proposal to “redact information about its revenues and expenses” from 2014, however.
Deep Dive Into Ripple’s Motion and Potential Harm to Business Interests
It could be recalled that the legal dispute between the US SEC and Ripple began on December 22, 2020, when the financial regulator charged Ripple and several of its executives with unlawfully raising more than $1.3 billion through an unregistered securities offering via the sale of XRP.
The case has undergone several revisions over the years, culminating in its trial phase, which commenced on April 23, 2024.
The SEC is seeking over $2 billion in fines and penalties from Ripple. Ripple opposed the SEC’s demand, however, arguing that the civil penalty should not exceed $10 million.
Meanwhile, Ripple filed a motion on May 14, 2024, to seal or narrowly redact some of its documents concerning the SEC’s motion for judgment and remedies. Ripple argued that disclosing these non-public documents would cause “significant harm” to its business interests.
The company wants to seal or redact highly confidential information concerning its earnings, revenues, and expenses.
#XRPCommunity #SECGov v. #Ripple #XRP @Ripple has filed a Motion to Seal Certain Documents filed in connection with the @SECGov‘s Motion for Judgment and Remedies.
https://t.co/BCeLaHOnw0— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) May 14, 2024
Ripple’s motion also noted plans to keep its contractual agreements with third-party business partners confidential. While Ripple acknowledges that offering discounts to institutional XRP buyers is relevant, it is unwilling to disclose the specific financial and pricing terms.
The SEC’s filed response believes that Ripple’s business details should be made public as it could shed more light on Ripple’s XRP sales and play an important role in the legal process. It should be noted that Ripple’s CTO, David Schwartz, recently disclosed the XRP sales strategy without stating the SEC’s pressure as the reason behind the sales.