The United States District Court for the Southern District of New York has delivered a major ruling in favor of the Securities and Exchange Commission (SEC) in its ongoing case against Ripple Labs.
The United States District Court for the Southern District of New York has delivered a major ruling in favor of the Securities and Exchange Commission (SEC) in its ongoing case against Ripple Labs.
Judge Sarah Netburn granted the SEC’s motion to compel, requiring Ripple to submit full financial statements for 2022-2023, post-complaint contracts, and respond to an interrogatory about revenue from institutional sales of XRP after it was filed the complaint.
Ripple’s procedural objections overturned
Ripple’s defense argued that the SEC’s request for post-complaint discovery was untimely and previously barred by the court’s ruling in June 2021.
However, Judge Netburn clarified that the previous denial was contextual, tied to the experts’ discovery of merit, and did not control the current matter.
The judge ordered Ripple to provide its 2022-2023 financial statements, which the SEC says are essential to determining an appropriate remedy.
Despite Ripple’s claim that its financial health is irrelevant and highly confidential, the court has deemed this information potentially probative for the relief stage.
Implications for remedies and injunctions
The dispute extended to whether Ripple’s post-complaint contracts should be disclosed, as the SEC believes these documents could be crucial in deciding the need and justification for an injunction.
Judge Netburn ordered the production of these contracts, agreeing with the SEC’s position that they can reveal whether Ripple’s post-complaint behavior has complied with court rulings, which could influence the imposition of an injunction.
The SEC’s victory also includes Ripple being ordered to answer an additional interrogatory about the proceeds from institutional sales of XRP after the initial complaint, which could influence the determination of any refund.
Although Ripple disagreed with the relevance of this request, the court concluded that the SEC had sufficiently demonstrated that this information could help craft an appropriate solution.
