On Tuesday, January 23, the United States Securities and Exchange Commission (SEC) filed a motion to US magistrate Judge of the Southern District of New York, Hon. Sarah Netburn, in further support of its motion to compel Ripple Labs to disclose certain financial documents regarding XRP sales after the 2020 legal action.
The US SEC’s attorneys, led by Jorge G. Tenreiro, argued that the discovery requests on the targeted XRP transactions are procedural and proper, as Ripple is believed to have violated investment contracts per the Howey test in the regular institutional sales.
The US SEC’s motion noted that Ripple’s pre-complaint contracts show that Ripple and its Institutional Sales counterparties made a pre-complaint commitment to exchange XRP for cash. However, Ripple has denied any violations and argued any discovery after the legal complaint in 202 should not be considered in the upcoming trial.
“Ripple may seek to argue that the Court should not give much weight to Ripple’s financial condition, but that argument cannot be the basis to deny the SEC its ability to discover and present evidence highly relevant to deterrence,” the SEC’s motion noted.
Market Implication and XRP Price Action
While the US SEC indicated that it is not seeking a mini-trial for a settlement deal, Australia-based crypto enthusiast lawyer Bill Morgan argued that a possible court injunction could pose short-term headwinds for Ripple’s On-Demand Liquidity (ODL) business that taps on XRP.
Meanwhile, XRP price dropped approximately 3 percent in the past 24 hours to trade below the crucial support level of around 54 cents at 51 cents during the early London session on Wednesday.