The SEC Wants What it Can’t Get: Ripple’s Foreign Trading Data

In a letter filed to a New York court Friday, US Securities and Exchange Commission attorney Jorge Tenreir complained that Ripple has not disclosed data that the SEC requires to work out whether the crypto payments company committed $1.3 billion worth of securities violations.

The SEC has already analysed wallet addresses associated with the Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, and found that hundreds of millions of XRP were transferred (either directly or indirectly) to at least a dozen non-US crypto exchanges.

But Ripple has “not turned over a single document concerning a non-U.S. domiciled digital asset account or otherwise explained the significance of these XRP transfers,” read the SEC’s letter, addressed to US District Court Judge Sarah Netburn.

The SEC can’t obtain such records from Ripple or any other third party; crypto exchanges are the only ones who have information about intraday XRP sales, it said. The SEC needs that information to determine whether Ripple timed company announcements, like the launch of a new fund, to pump the price of XRP.

The SEC took Ripple to court in December, alleging that Ripple raised $1.3 billion by selling XRP in ongoing unregistered securities offerings. Ripple denies these claims, but the SEC could bolster its case if it could prove that Ripple shifted the price.

If the SEC could show that Ripple marketed XRP as an investment, the agency could support its case that Ripple sold securities; under US law, companies that sell securities—investment contracts—have to register with the agency.

Try, try and try again

US crypto exchanges told the SEC they didn’t have the data “leaving the only avenue for investigation offshore.”

The SEC made requests to nine foreign regulatory agencies to obtain documents from 14 crypto exchanges that fall within their jurisdiction, five companies that Ripple claims use XRP, and one unidentified investor that purchased XRP directly from Ripple.

But according to the letter, that hasn’t gone too well. Two foreign regulators have declined to help out the SEC, three have barred the SEC from disclosing their conversation, and the SEC cancelled one request. The rest haven’t met the SEC’s requests.

XRP was the third biggest cryptocurrency by market cap when the SEC lodged its complaint in December. It has continued to rise in price, despite the ongoing case. Today an XRP is worth $1.05—far higher than before the lawsuit, when it was worth about $0.57.