Update on Ripple vs. SEC: SEC’s Latest Request in the Ongoing Ripple Legal Battle

On Tuesday, January 23, the Securities and Exchange Commission (SEC) of the United States filed a motion to US magistrate Judge of the Southern District of New York, Hon. Sarah Netburn, in further support of its motion to compel Ripple Labs to disclose certain financial documents regarding XRP sales after the 2020 legal action.
The attorneys of the SEC argued that the discovery requests on the targeted XRP transactions are procedural and proper, as Ripple is believed to have violated investment contracts according to the Howey test in the regular institutional sales.
The motion from the SEC noted that Ripple’s pre-complaint contracts show that Ripple and its Institutional Sales counterparties made a pre-complaint commitment to exchange XRP for cash. However, Ripple has denied any violations and argued that any discovery after the legal complaint in 2020 should not be considered in the upcoming trial.
The SEC’s motion stated, “Ripple may seek to argue that the Court should not give much weight to Ripple’s financial condition, but that argument cannot be the basis to deny the SEC its ability to discover and present evidence highly relevant to deterrence.”
There are significant implications for the market and the price of XRP. While it may not lead to a mini-trial, there is much at stake with this issue. A wide injunction could harm Ripple’s On-Demand Liquidity (ODL) business. It is likely that there will be discovery ordered of these post-complaint contracts.
Meanwhile, the price of XRP has dropped approximately 3 percent in the past 24 hours, trading below the crucial support level of around 54 cents at 51 cents during the early London session on Wednesday.