A New York judge has ordered Ripple Labs, the blockchain technology company behind the cryptocurrency XRP, to produce certain financial statements and information on the institutional sale of XRP tokens. This order comes in response to a request made by the U.S. Securities and Exchange Commission (SEC), according to court filings from Monday.
The SEC’s request, which was made in early January, follows a pivotal judgment in a lawsuit that accuses Ripple of selling unregistered securities in the United States. Last July, Judge Analisa Torres ruled that only Ripple’s institutional sales of XRP broke U.S. law. This ruling was celebrated by the crypto industry as a victory in its efforts to clarify how regulators treat digital assets.
The requested documents will aid Judge Torres in determining whether the court should order injunctions or civil penalties for the period since the lawsuit was filed in 2020. The SEC stated in its request that it will also help determine the amount of penalties, if warranted.
Magistrate Judge Sarah Netburn signed an order on Monday compelling Ripple to hand over financial statements for the years 2022-2023, as well as contracts governing institutional sales since the lawsuit was filed.
Ripple, however, opposed the SEC’s request in a filing on January 19, arguing that it was untimely and that the regulator had failed to justify each of its requests on the merits. Ripple’s counsel stated that the SEC’s request for “irrelevant and burdensome post-complaint discovery” should be denied.
Despite Ripple’s opposition, Judge Netburn granted the SEC’s request in full.
This latest development in the ongoing legal battle between Ripple and the SEC highlights the regulatory scrutiny faced by the cryptocurrency industry. The outcome of this case could have significant implications for how digital assets are regulated and traded in the United States.
Ripple, founded in 2012, is known for its digital payment protocol and cryptocurrency XRP. The company has faced legal challenges from the SEC since December 2020, when the regulator filed a lawsuit alleging that Ripple conducted an unregistered securities offering worth $1.3 billion.
The case has attracted widespread attention within the crypto community, with many industry participants closely watching the outcome as it could set a precedent for future regulatory actions against cryptocurrencies.