“The SEC seeks disgorgement of at least $1.38 billion in revenue generated by Ripple from those exact same contracts, yet says it can’t be bothered to actually read them”.
Ripple has filed a letter in opposition to the SEC’s request to avoid responding to the nearly 30,000 requests for admission (RFA).
Requests for admission are ‘yes or no’ questions that aim to move the lawsuit forward at greater speed as the answers provided can settle matters between parties when both sides agree on the facts.
The SEC argued that answering the RFAs was burdensome as it spent more than 100 hours responding to only 254 requests. This is about 24 minutes for a ‘yes or no’ question. The agency wants to make sure it is giving the right answer as the answers are under oath and can be used against them in court.
Ripple’s counsel team pointed out that filling out the RFAs exposes the SEC as it can be read in the transcript below:
“The RFAs concern critical facts that Defendants believe are not genuinely disputed; truthful admissions by the SEC will therefore significantly narrow the issues for trial. The SEC does not seriously argue that the RFAs are irrelevant. Instead, it focuses almost exclusively on the sheer number of RFAs to argue that they are “unduly burdensome. This is triply wrong.
“First, as a matter of law, “the large number of requests to admit is not in itself a basis for a protective order.
“Second, as a matter of fact, Defendants’ instructions will likely require the SEC to respond to only a fraction of these RFAs, as described in greater detail below.
“Third, the quantity of RFAs is proportional to the needs of the case; in fact, it is driven by the SEC’s own litigation theories. The largest set, Set Six, is based on the SEC’s “conten[tion] that every offer, sale, and distribution of XRP by [Defendants] during the Relevant Period [2013 through December 2020], was the offer, sale, or distribution of an investment contract.
“That contention puts centrally at issue the express terms of more than 1,700 separate contracts. Yet the SEC now complains that it would be unduly burdensome to “require the SEC to review” the contracts it alleges are unlawful securities offerings. This is a remarkable admission; apparently, the SEC failed to review these contracts before alleging in its complaint that every single one of them was part of a course of unlawful conduct. Indeed, the SEC seeks disgorgement of “at least” $1.38 billion in revenue generated by Ripple from those exact same contracts, yet says it can’t be bothered to actually read them.
“Despite multiple invitations to do so, the SEC has not yet identified a single contractual provision that supports its claim that these are “investment contracts” under the Howey test, yet it has reserved the right to rely on such contracts in support of its claims.
“Defendants are entitled to answers to RFAs that are expressly targeted at requiring the SEC either to identify such provisions or admit (as we believe the SEC must do) that such provisions do not exist. The SEC should not be permitted to avoid making these admissions and narrowing the scope of trial merely because it has made extremely broad allegations that touch upon a large number of facts and documents. The Court should deny the SEC’s request for a protective order”.
There’s more on Ripple:
- Ripple lawsuit raises hopes as ‘Crypto Mom’ condemns SEC policy
- SEC v. Ripple: XRP Holders score “huge win” with Amicus Curiae status
- SEC pushes back against Ripple’s “flawed search” of evidence on XRP
- Ripple running out of time as BIS ‘conspires’ to end cryptos’ threat to financial system
- SEC v. Ripple: XRP’s utility and currency value backed by former U.S. Treasurer
- Ripple pushes SEC up against the wall: “If personal opinions, then no privilege”
- Ripple buries SEC in paperwork in XRP lawsuit: Nearly 30,000 requests
- Ripple responds to Senator Toomey on XRP, the SEC, and how to do better