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Highlights
- Ripple is expected to bring up the ODL sales issue in remedy phase.
- Ripple and SEC could clash owing to conflicting opinion regarding ODL sales.
- Though the SEC won a motion against Ripple, it could face a strict counter in the upcoming phase of legal proceedings.
In the ongoing legal quandary between Ripple and the U.S. Securities and Exchange Commission (SEC), lawyer Bill Morgan underscored a critical issue concerning sales of XRP to On-Demand Liquidity (ODL) customers. He expects the Ripple vs. SEC legal clash to escalate centering around the crypto payments firm’s ODL sales. This comes after the SEC won the motion to obligate Ripple to present its financial statements for 2022-23.
Ripple & SEC Might Clash On ODL Sales Issue
Morgan recently took to X and noted that ODL customers using Ripple’s technology are not subject to injunction. However, he added that sales of XRP by Ripple to these customers could face restraint unless registered, which is a critical matter.
He suggested that the matter of sales to the ODL customers might become central in the appeal or remedies phase of the lawsuit. In addition, Morgan highlighted the organization’s intention to push this issue during the remedies phase of the Ripple vs SEC case. He pointed to statements made by the SEC in its reply brief on the motion to compel, which emphasized Ripple’s stance.
According to the SEC’s reply brief on the motion, Ripple believes the factual questions regarding post-complaint institutional sales must be resolved in the remedies stage. Moreover, Ripple asserted that Judge Torres’ ruling on institutional sales does not apply to its current ODL sales. This clarification suggests that Ripple intends to sternly advocate for its position during the upcoming phase of the legal proceedings.
Whilst, the lawyer also emphasized that ODL can function without customers directly purchasing XRP from Ripple, as they can acquire it from secondary markets. Moreover, Morgan underscored that the U.S. courts could face a challenge in the case of overseas sales to ODL customers.
In addition, he noted that the commercial viability of alternative sales mechanisms for Ripple in the US market becomes pivotal if direct sales are restricted. Furthermore, Morgan stressed that the SEC is well aware of this issue, which could exert significant pressure on Ripple to ensure future sales comply with legal and commercial imperatives.
Also Read: Ripple Dumps 120 Mln XRP After SEC Gains Upper Hand In Legal Quandary
SEC Attains Upper Hand On The Case
In January 2024, amidst the ongoing Ripple vs. SEC lawsuit, the SEC filed a motion seeking approval from the Magistrate Court presided over by Judge Sarah Netburn. The motion aimed to compel Ripple to disclose its financial statements for the years 2022-2023. Additionally, the SEC requested access to information regarding post-complaint contracts governing institutional sales of XRP, as well as answers regarding the extent of proceeds derived from these sales.
The Magistrate Court, under the jurisdiction of Judge Sarah Netburn, granted consent to compel Ripple to disclose financial statements for the period of 2022-2023. Furthermore, the court approved the SEC’s request for information regarding post-complaint contracts overseeing institutional sales of XRP and responses to inquiries concerning proceeds from such sales.
Subsequently, the U.S. District Court for the Southern District of New York approved all of these requests. Hence, the regulatory entities allowed the SEC to proceed with its investigation into Ripple’s financial activities and sales of XRP during the specified timeframe.
Also Read: Breaking: SEC Bags Win Over Ripple’s Financial Statement Dispute
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