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Ripple execs file new motion – What does it mean for their XRP sales contention?

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The ongoing lawsuit filed by the SEC against Ripple Labs and its execs is showing no signs of slowing down or ending anytime soon. Ripple’s latest defense now challenges the SEC’s jurisdictional authority over the exchanges that Brad Garlinghouse and Chris Larsen sold XRP to. As a matter of fact, the SEC, in its amended complaint, sought disgorgement for the two billion units of XRP sold by the execs on digital asset trading platforms located outside the U.S.

The individual defendants in the case have filed a motion seeking the court’s approval to request documents from over a dozen digital currency exchanges located “all over the world.” By doing so, the defendants want to establish that the XRP sales they made were beyond the jurisdiction of the regulatory agency. The individual defendants also argued in their motion that Section 5 of the Securities Act only applies to “domestic” sales and offers of securities.

Justifying the ultimate reason behind their international discovery request, their motion noted,

“The evidence to be obtained from the digital asset trading platforms is probative of the issue whether “irrevocable liability” was incurred outside the US with respect to these transactions.”

The third parties in question here include prominent exchange platforms like Upbit, Korbit, Huobi, Coinone, and Bitstamp. Additionally, the defendants’ letter stated,

“We understand that the Plaintiff, the Securities and Exchange Commission, does not object to this motion.”

With this motion, the defendants have requested the court to issue the attached letters of request for international judicial assistance and compel the aforementioned entities to produce documents. Here, it should be noted that the Court has the authority to request any competent authority of another state to obtain evidence. This motion is quite important for the defendants because it has the potential to provide them with concrete evidence before the close of fact discovery.

The Letters of Request to the entities seeks the assistance of the Central Authorities of Singapore, South Korea, Hong Kong, the U.K, Cayman Islands, the British Virgin Islands, Seychelles, Malta, and Northern Ireland to obtain documents relevant to the case that are otherwise unobtainable through other means from the entities. 

“The Individual Defendants seek foreign discovery on the basis of their good faith belief that the listed entities possess unique documents and information concerning this case.”

According to the aforementioned motion, the entities could potentially produce evidence that specifically dealt with the transactions of XRP on their respective foreign digital trading platforms. 

“There is good cause for the Court to issue the Letters of Request. The information sought in the document requests is narrowly tailored to obtain relevant information related to the case.”

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With a keen eye on the Indian economic ecosystem, Lavina Daryanani's writing predominantly revolves around crypto-happenings in the Asian markets. She has a strong background in journalism and a personal inclination towards business and financial reporting.