The U.S. Securities and Exchange Commission on Tuesday filed a response to Ripple’s motion to seal and redact the company’s business information in the parties’ briefs on the remedies.
The SEC argued that Ripple’s request to conceal “financial and securities sales information” from the public was unlawful because the details in question were critical to the relief sought.
Ripple’s objection described by SEC as “unlawful”
In addition, the Securities and Exchange Commission alleged that Ripple’s redaction requests would obscure public information that was critical to the court’s decisions at the remedial stage and to the public’s understanding of the penalties.
The details that the Securities and Exchange Commission wants Ripple to release include the value of Ripple’s current assets (relevant to the amount of the penalty), recent sales figures (relevant to injunctive relief and penalties), revenues and expenses (related to compensation), and the amount of discounts given to some institutional investors (reflecting the harm to investors).
The financial regulator further argues that Ripple has not provided adequate evidence that disclosure of publicly available information would result in significant harm that warrants protection. Additionally, the Securities and Exchange Commission points out that some financial details are outdated and some evidence is publicly available.
“Ripple seeks to conceal the extent to which it has offered XRP at discriminatory prices. However, the period in which Ripple has offered discounts stretches back to 2014 and ended in December 2020,” the US exchange report said. “Ripple has not shown how the discounts it offered four years ago and more are significant, especially as Ripple seeks to avoid remedial action by claiming it has ‘changed the way it sells XRP and its contracts.'”
It is worth noting that the Securities and Exchange Commission is not opposed to keeping Ripple’s most recent financial reports confidential. Nor is it opposed to the company’s motion to seal the five documents in question in their entirety and to use some of the redactions it proposed for remedial action.
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
However, it strongly rejects the company’s proposal to black out “information about its income and expenses” from 2014.
Deep dive into Ripple’s application and potential impact on business interests
The legal battle between the U.S. Securities and Exchange Commission and Ripple began on December 22, 2020, when the financial regulator accused Ripple and several of its executives of illegally raising more than 1.3 billion USD through an unregistered securities offering for the sale of XRP.
The case was revised several times over the years and finally culminated in the trial phase, which began on April 23, 2024.
The Securities and Exchange Commission is demanding over 2 billion USD in fines and penalties from Ripple. However, Ripple has fought back against the SEC’s demand, arguing that the civil penalty should not exceed 10 million USD.
Meanwhile, on May 14, 2024, Ripple filed a motion to seal or narrowly redact some of its documents relating to the SEC’s motion for judgment and relief. Ripple argued that disclosure of these non-public documents would cause “substantial harm” to its business interests.
The company wants to seal or obscure highly confidential information about its profits, income and expenses.
XRPCommunity SECGov v. Ripple. 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.
Ripple’s filing also notes that the company intends 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 Securities and Exchange Commission believes that Ripple’s business details should be made public as they could shed more light on Ripple’s XRP sales and play an important role in the legal process. It is worth noting that Ripple’s CTO David Schwartz recently disclosed the XRP sales strategy without citing Securities and Exchange Commission pressure as the reason for the sales.
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