Ripple Labs has launched a strong defense against the SEC’s accusations, directly challenging two key arguments made by the regulatory body.
Ripple’s defense strategy highlights the company’s belief that its current financial standing and past contracts have no relevance to the SEC’s case.
Ripple Labs has intensified its legal defense against the US Securities and Exchange Commission (SEC) by directly addressing two key arguments put forth by the regulatory body in their ongoing legal battle. This move was outlined in a recent filing presented to Judge Analisa Torres of the Southern District of New York. The submission arrives at a crucial moment, with the SEC seeking penalties of nearly $2 billion, a figure significantly different from Ripple’s proposed limit of $10 million.
In a detailed letter addressed to Judge Torres, written by Andrew J. Ceresney of Debevoise & Plimpton LLP, Ripple challenges the SEC’s argument that its current financial standing should be taken into account when determining past penalties. Referring to the SEC’s opposition brief, where the regulatory body deemed this information “important to the Court’s determinations” regarding remedies for past misconduct, Ripple disagrees, stating that its financial situation, evaluated years after the alleged violations, should not be relevant to the case.
The defense argues, “Ripple is not claiming that it may be unable to pay any assessed penalty, and there is otherwise no reason to believe that Ripple’s current financial statements (from years after the alleged conduct) are relevant to the Court’s analysis.”
Furthermore, the fintech company emphasizes the lack of necessity in disclosing sensitive financial information, which the court could disregard without proper consideration. Ripple strengthens this position with legal precedents, such as Tropical Sails Corp. v. Yext, Inc., which recognizes a “valid privacy interest in the financial documents of a privately held company.”
Ripple Puts the SEC on the Defensive
Ripple’s response to the SEC’s accusations also addresses a crucial point regarding the relevance of its past contracts, according to the Crypto News Flash report. While the SEC dismisses these contracts as outdated and irrelevant due to changes in XRP sales methods, Ripple, represented by CFO Jonathan Billich, argues otherwise.
According to Billich’s statement, the terms of these previous contracts remain confidential and commercially sensitive. Revealing them could potentially give future counterparties an unfair advantage in negotiations. Ripple emphasizes that its current sales of XRP are significantly different from past over-the-counter contracts, with no discounts offered to sophisticated counterparties.
Furthermore, Ripple challenges the SEC’s claims regarding the need for public disclosure of XRP prices under securities law, even if they were considered investment contracts requiring registration. Given the court’s previous ruling that XRP is not a security, Ripple argues that the court must treat the price terms in past contracts differently from those applicable to registered securities.
This defense strategy underscores Ripple’s firm stance on the irrelevance of its current financial situation and past contracts to the SEC’s case. Andrew J. Ceresney of Debevoise & Plimpton LLP, representing Ripple, emphasizes the company’s right to privacy and commercial sensitivity in the financial sector.
In the filing, he states, “Even if the SEC’s arguments were plausible, Ripple has still established a valid, commonly accepted basis for sealing its confidential financial documents,” highlighting the importance of maintaining confidentiality in such matters.