Just to remind: The SEC had on December 20, filed a lawsuit against Ripple Labs Inc and two top executives for selling unregistered digital asset securities to investors.
A US Judge has compelled Ripple to grant the Securities and Exchange Commission (SEC) access to the one million missing Slack messages requested by the prosecutors. Recall that on August 9, the SEC had submitted a motion to order Ripple to produce the messages arguing that it was germane to the case. It also requested that Ripple make available all messages from their 22 email custodians. Consequently, the judge has ruled in their favor despite Ripple’s protests to the contrary.
The defendants have argued that the sheer cost of complying will cost the company up to $1 million. To this, the presiding magistrate, Judge Sarah Netburn answered that the messages were critical to the case.
“Any burden to Ripple is outweighed by its previous agreement to produce the relevant Slack messages, the relative resources of the parties, and the amount in controversy,” Judge Netburn said.
She further responded that the importance of the messages to the case far outweighed the cost it will take the multi-billion dollar enterprise to produce them.
SEC’s Case Against Ripple
The SEC had on December 20, filed a lawsuit against Ripple Labs Inc and two top executives. Company co-founder Christian Larsen and current CEO Bradley Garlinghouse were alleged to have raised over $1.3 billion by offering unregistered digital asset securities to investors.
Additionally, the company was alleged to have distributed billions of XRP in exchange for non-cash consideration. It didn’t stop there. Larsen and Garlinghouse were also accused of making personal unregistered sales of up to $600 million XRP.
As the case developed, both sides have suffered wins and losses. Recently, the SEC filed a motion for complete disclosure. When this was granted, it gave them the legal right to check out Ripple’s employee Slack messages. However, on presentation, SEC claimed that Ripple produced an incomplete. After initial denials, Ripple stated that it was a data processing mistake and that over one million messages were missing.
The SEC argued that the removal of pertinent information was an attempt to cripple the case as the other messages received suggest to the SEC that the remaining would be highly relevant.
In their statement, “These messages include: (a) discussions about Ripple’s desire to create speculative trading in XRP, (b) the effect of Ripple announcements and efforts on, and Ripple’s concerns as to, the price of XRP, the relationship and central importance of XRP sales to Ripple’s overall business, and (d) the regulatory status of XRP.”