The relentless filing of motions has meant that the legal battle between the SEC and Ripple has taken several new turns. Just recently, the SEC requested the court additional time to extend its deadlines for both fact and expert discovery by a period of 60 days.
The defendants, however, were downright against the extension and contended that their business operations would be threatened by the unforeseen delay. They further stated that the regulatory agency had not noted any “good cause” for extending the discovery schedule.
In what is the latest development, however, the agency has now filed a reply in an attempt to invalidate Ripple’s aforementioned claims.
According to the SEC, the “undue prejudice” and “existential threat” remarks of the defendants are both “legally and factually unsupported.” While Ripple had cited two cases in support of their arguments, the SEC is now claiming that neither of them supported the denial of an extension request.
“The SEC is not aware of any decision denying a plaintiff additional time for discovery to advance that defendant’s business interests, and Ripple cites to none.”
Additionally, Ripple had also claimed that its purported ODL money transfer product would be “unfairly harmed” by the extension. Retaliating back, the agency asserted,
“The SEC’s Amended Complaint alleges and the evidence shows that Ripple earned only de minimis [minimal] fees from its ODL product before the SEC filed the case, and instead funded its operations through its unregistered offers and sales of XRP…”
The SEC also went on to contend that the sale of the aforementioned “digital asset security” exhibited “unlawful conduct” on Ripple’s part. Ripple’s financial statements, it argued, confirmed that before the filing of the case, it earned “hundreds of millions of dollars” a year from XRP sales. The overwhelming majority of the fees had “nothing to do” with ODL, the reply said.
The blockchain firm had also pointed out that numerous digital asset trading platforms had suspended trading in XRP, thereby leaving the asset “essentially illiquid” in the U.S.
According to the regulatory agency, however, XRP’s illiquidity claims are “unsupported” by the record. XRP is still available for purchase on dozens of digital asset trading platforms, the SEC said, claiming that the asset’s trading volume was about three times higher on 11 June than it was a year ago. Curiously, the agency was also quick to highlight that XRP’s price has risen by 4x since.
“However, Ripple’s desire to end this litigation and return to normal business-as-usual, without regard to the requirements of the securities laws or the harm to the public resulting from violations of registration requirements, is not a valid reason to deny the SEC’s request.”
Finally, Ripple had also claimed that the SEC’s primary argument for extension was the SEC’s own self-prompted motions. The SEC retaliated by stating that most of the motions in the case were filed by the defendants. According to the aforementioned reply, the SEC has been “diligent” in serving document requests and subpoenas throughout. What’s more, the SEC blamed Ripple for attempting to “prevent” it [the SEC] from obtaining relevant discovery by denying the extension.
“This remarkable effort by Ripple appears to have resulted in weeks of delay in the production of third part documents.”
The SEC’s letter concluded by stating,
“What Ripple really wants is special treatment: the ability to veto a reasonable extension of the discovery schedule, notwithstanding the SEC’s diligence to further Ripple’s litigation strategy.”
Needless to say, reactions to the same were very vocal, with popular attorney Jeremy Hogan opening,
“I think looking at Roman Num. III of the SEC’s motion, it fails to be very specific about what FACTS it still needs to develop and that is a problem for it.”
If the SEC’s request gets approved, the period for fact discovery would end on 31 August and the period for expert discovery would conclude on 15 October.
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