Two Ripple executives have sent a letter to the Southern District Court in New York requesting that subpoenas for personal finance information from the U.S. Security and Exchange Commission (SEC) be denied. The SEC filed a lawsuit against the company last year.
Brad Garlinghouse, chief executive officer for Ripple, and Chris Larsen, the company’s co-founder and executive chairman, asked Judge Sarah Netburn to stop subpoenas that are demanding almost a decade of financial information on the two executives. The subpoenas were delivered to six banks: SVB Financial Group, First Republic Bank, the Federal Reserve Bank of New York, Silver Lake Bank, Silvergate Bank and Citibank N.A, per the letter.
“The SEC has not offered and cannot provide a coherent explanation for why it is entitled to this information,” according to the letter, which was sent by lawyers on behalf of the executives. “The individual defendants’ privacy interests are especially powerful here, because the requests and subpoenas seek such a comprehensive intrusion into their personal financial lives.”
The two executives said that the SEC’s request is “wholly inappropriate overreach” and an “invasion of privacy,” because the case concerns “non-fraud litigation” over allegations that the company sold unregistered securities. They maintain there are no accusations that their finances were mixed with Ripple’s, and that regulators are asking for financial data about matters totally unrelated to the business, such as things like “how much money they spend at the grocery store every week,” Bloomberg reported on Friday (March 12).
Larsen and Garlinghouse are accused of personally making $600 million in profits. The SEC maintains that they disregarded legal advice warning them that the cryptocurrency could be considered a security.
The SEC’s lawsuit against Ripple led to its partnership with MoneyGram being severed. MoneyGram is also facing a lawsuit from investors who purchased Ripple’s XRP digital currency. The SEC’s suit, which was filed in December 2020, alleges that the company held a $1.3 billion unregistered securities offering. Ripple responded to the complaint in January stating that the SEC is incorrect and that its XRP cryptocurrency is not a security, but is a medium of exchange used to facilitate transactions worldwide.
