XRP dispute: Ripple lawyers in attack mode, class action against SEC
New twists and turns in the Ripple v. SEC case are leaking out almost daily. Aggrieved investors now want to join a class action lawsuit, while the Ripple legal team wants to prevent the inspection of financial documents.
Hardly any legal dispute is accompanied by as much media interest as the Ripple v. SEC case. Since the US Securities and Exchange Commission classified XRP as a Bitcoin Code security token, and thus as a security, at the end of last year, the bad news for the Californian FinTech has been mounting. Gradually, however, resistance to the SEC’s action is emerging. It is not only Ripple that is at odds with the authority. Investors are also getting involved in the process, true to the motto: attack is the best defence.
The current SEC investigations focus on Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. The authority accuses both of having personally enriched themselves from the XRP turnover. A total of 600 million US dollars is said to have flowed directly into the pockets of the management team over the years, not exactly peanuts. In order to get an exact overview of the money flows, the SEC is demanding comprehensive insight into the defendants‘ finances.
The legal team has now reacted by seeking to prevent the inspection of the files in court. They argue that the personal finances of Garlinghouse and Larsen are not the subject of the Ripple investigation and in this sense irrelevant to the trial.
The SEC’s multi-pronged attempt to sift through each defendant’s personal financial information in a non-fraud proceeding in which the defendants have already agreed to produce the relevant information regarding the challenged transactions is wholly improper overreaching.
Lawyers‘ letter of 11 March
Accordingly, the lawyers demand that the personal financial records be kept under seal. In addition, the SEC’s subpoenas to six banks and payment service providers should be stayed. The SEC had requested the hearing of representatives of SVB Financial Group, First Republic Bank, Federal Reserve Bank of New York, Silver Lake Bank, Silvergate Bank and Citibank.