02 March, 2024



Ripple Files for Extension on Financial Disclosure Deadline in SEC Case

3 weeks ago

28 Feb, 2024

  • Ripple requests extension to February 20, 2024, for financial disclosures after court ruling.
  • Court mandates Ripple to disclose 2022-2023 financial details and post-compliant sales data.
  • SEC consents to Ripple’s deadline extension for submitting financial records.

Ripple has recently sought an extension for submitting additional financial disclosures following a court decision that favored the U.S. Securities and Exchange Commission (SEC). The decision, issued by U.S. District Judge Analisa Torres and Judge Sarah Netburn, mandates Ripple to provide its financial records for 2022-2023, along with details on “post-compliant institutional sales” of XRP. This ruling supports the SEC’s request, challenging Ripple’s stance that the demand was “unnecessary” and “untimely.”

On February 6, Ripple responded with a court filing to Judge Torres, requesting a delay in the deadline from February 12 to February 20, 2024. The firm argued that the timeframe to produce the required documents, which encompass a vast array of data spanning the entire post-complaint period, was insufficient. The SEC has agreed to this extension, marking a notable moment of consensus in the ongoing legal battle between Ripple and the regulatory body.

This case highlights the broader debate on what constitutes a ‘security’ within the digital currency space, echoing sentiments previously expressed in the legal discourse. Such discussions are pivotal, given their implications for regulatory practices and the classification of cryptocurrencies.

The lawsuit initiated by the SEC against Ripple and its executives, Brad Garlinghouse and Chris Larsen, in December 2020, accused them of conducting unregistered securities offerings through XRP sales. A significant development occurred in July 2023 when a judgment ruled XRP as a security only in transactions with institutional investors. This led to a partial victory for Ripple, although the SEC later dropped its case against Garlinghouse and Larsen while continuing its pursuit against Ripple.

As part of its compliance efforts, Ripple is set to furnish the SEC with detailed financial statements and contracts related to XRP sales to institutional buyers, hedge funds, and On-Demand Liquidity (ODL) customers covering a three-year duration. This request, however, has been labeled by Ripple as “overly burdensome,” sparking the request for an extension to gather and submit the necessary documentation.

Amid these legal proceedings, the SEC has been active in its enforcement actions against major cryptocurrency exchanges, reflecting its rigorous stance on regulatory compliance within the sector. This includes high-profile cases involving Coinbase, Kraken, and Binance, with Ripple’s chief legal officer, Stuart Alderoty, critiquing the SEC’s aggressive regulatory approach.

The development comes amidst a significant security breach that occurred in January, targeting the personal XRP wallets of Ripple executive Chris Larsen, resulting in the theft of approximately $112 million. Binance, a leading cryptocurrency exchange, intervened by freezing a portion of the stolen funds, showcasing the ongoing challenges and security concerns within the cryptocurrency ecosystem.

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