- Ripple has filed a new motion accusing the SEC of violating U.S civil court rules by reaching out to its foreign partners behind its back.
- Ripple claims that this is an intimidation tactic by the SEC to deter these entities from conducting business with the company.
The U.S Securities and Exchange Commission has been acting behind Ripple’s back to pursue its foreign partners, a new court motion by the San Francisco-based firm has alleged. Ripple claims that the regulator has been engaging in intimidation tactics to scare off its partners. This constitutes a violation of federal rules, the blockchain payments company has claimed. This comes just days after Ripple’s top executives – and defendants in the case – filed a motion to dismiss the SEC lawsuit.
Behind the judge's back, the SEC violated U.S. civil court rules by issuing multiple "MOUs" to obligate foreign govts to obtain files from @Ripple's foreign business partners. They got caught.
Read the full letter to Judge Netburn here 👇https://t.co/9P7wIMfTr8
— CryptoLaw (@CryptoLawUS) April 16, 2021
Ripple’s legal team filed the motion at the Southern District of New York. “We write on behalf of Defendants … concerning the SEC’s undisclosed and pervasive use of SEC pre-litigation investigative tools to conduct discovery in this lawsuit,” the motion states.
Ripple claims the SEC has acknowledged that it made at least 11 MOU requests seeking documents from overseas entities. Many of these entities are Ripple’s business partners. Involving local regulators “is not only improper but also amounts to an intimidation tactic that has the effect of deterring those entities from continuing to do business with Ripple.”
The SEC formally agreed to share with Ripple the entities it has contacted, but it has yet to do so. In addition, the watchdog refuses to cease this behavior, the company alleges.
Defendants do not dispute the SEC’s right to conduct informal interviews, but rather its ability to issue compulsory process, over and beyond the discovery permitted by the Federal Rules. The MOU process is available only to the SEC, not Defendants, and its use creates a fundamental inequity in the litigation. Neither party should be permitted to exercise powers over the discovery process that the other cannot.
Ripple racks up more partners despite the SEC lawsuit
The motion further alleges that the SEC has refused to give RIpple and its executives notice, violating federal rules.
While the SEC has agreed to share the “substance” of its MOU requests, it refuses to produce the requests themselves or related correspondence with foreign regulators,claiming privilege, and likewise declines to provide Defendants notice of any future requests.
The company requested Judge Sarah Netburn to order the SEC to withdraw its outstanding MOU requests to foreign regulators. It also wants the judge to order the watchdog to produce the communications it has had with foreign regulators on the Ripple case.
🤓The footnotes are unsung heroes in Ripple's recent motion. They're asking the courts to make the SEC send a copy of the Ripple motion to foreign govs to let them know the SEC's actions are being challenged! 😅 pic.twitter.com/JIRn11R1JR
— WrathofKahneman (@WKahneman) April 16, 2021
Despite its legal troubles, Ripple has continued to rack up more partners globally. The latest partnership is with Novatti Group, an Australian payments company that will now use XRP for cross-border payments.
Announcing the partnership on its website, Ripple wrote:
The partnership initially focuses on remittances between Australia and the Philippines… Live now, Novatti expects to process several thousand transactions a month through RippleNet and is planning to quickly scale the service to more fintech customers and other countries in Southeast Asia.
Brad Garlinghouse, Ripple’s CEO, revealed in an interview on CNN earlier this month that despite the SEC lawsuit, the firm has added over 20 new partners this year. He also revealed that over 90% of the firm’s business partners are outside the U.S.