SEC turns the tables, now wants Ripple to produce video recordings of internal meetings

  • Ripple had managed to keep the fact that it recorded its meetings unnoticed until one of its employees was deposed and revealed it.
  • Now, the SEC is going after all these recordings, turning the tables on Ripple which has been going after the regulator’s internal memos.

Ripple Labs Inc. has been going after the U.S Securities and Exchange Commission’s internal memos in a bid to prove that the regulator failed in its role of establishing regulatory clarity. But now, the tables have turned. The SEC is now going after Ripple, seeking to lay its hands on the company’s internal deliberations. The watchdog has filed a motion seeking access to the firm’s video and audio recordings of its meetings.

The SEC filed the motion before Judge Sarah Netburn at the Southern District of New York yesterday, August 30th.

According to the motion, the SEC wasn’t aware that Ripple recorded its internal meetings. In fact, when the SEC requested that Ripple produce all relevant recordings in January, it was merely fishing. And despite the request, Ripple refused to reveal that it had several recordings of its meetings.

However, it all changed on August 4th when the SEC deposed Antoinette O’Gorman, the chief compliance officer at the blockchain payments company. She revealed that Ripple routinely recorded staff meetings, a fact that the company had conveniently left out. When the SEC asked it to turn over these recordings, the firm “refused to do so, despite acknowledging that Ripple maintains several categories of recordings, including all-hands meetings, training, panels, and weekly meetings.”

Ripple played us, SEC claims

Ripple has been concealing the fact that it had on its hands information that was pertinent to the lawsuit, the SEC claims. This is despite one of the most hotly contested things in the lawsuit being access to information from each faction. The SEC has been going after Ripple’s Slack messages while the San Francisco firm has been going after the SEC’s internal trading policies.

Read More: “Did your employees trade XRP?” Ripple goes after SEC staffers as discovery deadline pushed

In its defense for not turning over the recordings, Ripple has reportedly been claiming that this would be “unduly burdensome as there are hundreds of such recordings during the relevant period, with no way of knowing what was discussed in the record without listening to each recording.”

The regulator further argues that despite arguments to the contrary by Ripple, its request for recordings of internal meetings is proportional to the needs of the case. It justifies the request as taking into account “the amount in controversy, the parties’ relevant access to relevant information, the parties’ resources, [and]the importance of the discovery in resolving the issues and whether the burden or expense of the proposed discovery outweighs its likely benefit.”

In these recordings, the watchdog hopes to find evidence of efforts that Ripple took to increase or maintain XRP’s price or to create expectations of profits in potential XRP purchasers. These are relevant to its argument that XRP is a security under the Howey test.

The SEC also hopes to find admissions by CEO Brad Garlinghouse and chairman Chris Larsen that may counter their statements, “including their contemporaneous understanding of the application of the securities laws to offers and sales of XRP.”

 

About Author

Steve has been a blockchain writer for four years, and a crypto enthusiast for even longer. He is most excited by the application of blockchain to solve the challenges facing developing nations.

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