In brief
- The SEC requested eight years of financial records from CEO Brad Garlinghouse and his predecessor, Chris Larsen.
- But the SEC’s request for disclosure of financial documents was quashed after a court ruling.
Crypto payments company Ripple prevented on Friday the US Securities and Exchange Commission (SEC) from publishing the financial records of its CEOs.
The SEC last month requested eight years of financial records from CEO Brad Garlinghouse and his predecessor, Chris Larsen.
The records, claimed the SEC, would support its ongoing lawsuit with Ripple, whom it is suing for raising $1.3 billion by selling XRP in ongoing unregistered securities offerings.
Ripple has denied these claims ever since the SEC lodged the complaint in December and has fought to prevent the SEC from disclosing these records to the public. Garlinghouse and Larsen’s lawyers called the requests an “overreach.”
Yesterday, Garlinghouse and Larsen won: the US Magistrate Judge Sarah Netburn granted Ripple’s motion to keep the financial records private.
Judge Netburn reasoned that even though financial records reflect bank deposits from cryptocurrency exchanges on a certain date, the records wouldn’t show how the pair made that money. The deposits could come from XRP sales, but they could also come from other crypto sales or transfers of US dollars.
“The SEC’s belief that the Individual Defendants’ banking records might show evidence of a speculative transaction that could have occurred (and that the Individual Defendants are not providing in their XRP transaction records) is not a foundation on which to order expansive discovery into personal financial accounts,” she concluded.
Jeremy Hogan, a partner at law firm Hogan & Hogan, said on Twitter that the Ripple CEOs “can take this as a good sign as to their Motions to Dismiss the lawsuits against them.”
“The Judge AGAIN makes remarks that the technical/operational aspects of XRP are important to the case. Ripple WANTS it to be about that. The SEC wants to stay clear of that-they want it to be only about marketing and money; but this Judge is saying otherwise!” he said.
Last week, Ripple agreed with the SEC to partially redact two emails the SEC sought from its CEOs. Separately, it also won a discovery motion requiring the SEC to hand over documents over its reasoning on crypto assets.