Ripple Disputes 2 Crucial SEC Claims In New Filing: Details


Ripple
Labs
has
escalated
its
defense
against
the
US
Securities
and
Exchange
Commission
(SEC)
by
specifically
addressing
two
critical
arguments
from
the
SEC
in
their
ongoing
legal
dispute,
as
outlined
in
a
new
filing
submitted
to
Judge
Analisa
Torres
of
the
Southern
District
of
New
York.
This
filing
comes
at
a
decisive
moment,
with
the
SEC
advocating
for
penalties
nearing
$2
billion,
contrasting
sharply
with
Ripple’s

recommendation
of
a
$10
million
cap.

Ripple
Follows
Up
With
New
Filing

In
the
detailed

letter
to
Judge
Torres,
authored
by
Andrew
J.
Ceresney
of
Debevoise
&
Plimpton
LLP,
Ripple
contends
against
the
SEC’s
assertion
that
its
current
financial
condition
should
influence
the
court’s
decisions
regarding
historical
penalties.
Citing
the
SEC’s
opposition
brief,
the
SEC
deemed
this
information
“important
to
the
Court’s
determinations”
on
remedies
relating
to
its
past
conduct.

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Ripple
refutes
this
by
stating
its
financial
health,
assessed
years
after
the
alleged
violations,
should
not
bear
relevance
to
the
case.
The
defense
argues,
“Ripple
is
not
arguing
that
it
may
be
unable
to
pay
any
measured
penalty,
and
there
is
otherwise
no
reason
to
believe
that
Ripple’s
current
financial
statements
(from
years
after
the
challenged
conduct)
are
relevant
to
the
Court’s
analysis.”

The
fintech
company
also
points
out
the
lack
of
necessity
in
disclosing
its
sensitive
financial
information,
which
could
be
dismissed
by
the
court
without
considering
such
details.
This
perspective
is
fortified
by
legal
precedents
cited
by
the
company,
such
as
in
Tropical
Sails
Corp.
v.
Yext,
Inc.,
which
recognizes
a
“legitimate
privacy
interest
in
the
financial
documents
of
a
privately
held
company.”

The
second
major
contention
addressed
concerns
the
SEC’s
claim
regarding
the
irrelevance
of
Ripple’s
historical
contracts
due
to
changes
in
how
XRP
is
sold.
Contrary
to
the
SEC’s
description
of
these
as
“stale”
information,
Ripple
argues
through
the
declaration
of
Jonathan
Billich,
its
CFO,
that
these
past
contract
terms
remain
confidential
and
are
commercially
sensitive.

Billich’s
declaration
details
that
future
counterparties
could
gain
substantial
leverage
if
they
had
access
to
the
terms
negotiated
in
past
contracts.
Ripple
underscores
that
its
sales
methods
have
changed,
and
current

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sales
of
XRP
are
devoid
of
the
conditions
seen
in
past
over-the-counter
contracts,
such
as
discounts
offered
to
sophisticated
counterparties.

The
company
further
refutes
the
SEC’s
incorrect
assertions
regarding
the
necessity
of
public
disclosure
of
XRP
prices
under
securities
law,
even
if
they
were
deemed
investment
contracts
requiring
registration.
The
court
previously
determined
that

XRP
is
not
a
security,
thus
differentiating
the
price
terms
in
historical
contracts
from
those
applicable
to
registered
securities.

Ripple’s
defense
strategy,
particularly
its
firm
stance
on
the
non-relevance
of
its
current
financial
situation
and
historical
contracts
to
the
SEC’s
case,
highlights
the
high
stakes.
As
Ceresney
aptly
puts
it
in
the
filing,
“Even
if
the
SEC’s
arguments
were
plausible,
Ripple
has
still
established
a
valid,
commonly
accepted
basis
for
sealing
its
confidential
financial
documents,”
emphasizing
the
company’s
right
for
privacy
and
commercial
sensitivity
in
the
financial
sector.

As

reported,
the
legal
proceedings
are
drawing
to
a
close.
The
decision
on
whether
Andrea
Fox
serves
as
a
summary
or
expert
witness,
as
determined
by
Magistrate
Judge
Sarah
Netburn,
remains
the
final
step
before
Judge
Torres
can
issue
her
ruling
on
the
remedies
phase
of
the
case.

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Author: Jake Simmons


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