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Ripple Faces Setback in Its Legal Tussle With SEC

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  • SEC will continue to ask for details of financial transactions from Ripple’s overseas business partners
  • Ripple calls the move intimidatory
  • Will damage Ripple’s business prospects

Ripple’s request to stop the SEC or the U.S. Securities and Commission requests to foreign securities regulators have turned down the Magistrate Judge Sarah Netburn.

Yahoo Finance reports that Ripple’s request to stop SEC from obtaining documents from Ripple’sRipple’s overseas business partners through MOU requests has been turned down. Ripple has termed such moves as a means to intimidate its foreign business partners. The Judge, however, observed that the measure had been done in good faith and there are no mala fide intentions. 

Ripple wanted the SEC to use the archaic and lethargic inefficient Hague Convention process. However, Netburn says that the MoU requests are well within the rights of the SEC.

Yahoo Finance adds that the requests are beyond the scope of any bilateral agreements. In the past also the court has rejected the argument that Hague Convention is the only path when dealing with foreign finance issues. The court has directed the SEC to produce all documents procured via MOU requests. However, the SEC can still withhold specific details. The SEC also revealed that three overseas counterparts have refused to cooperate. 

The majority of users are based outside the U.S.

Ripple’s legal team had filed a letter to Judge Netburn, which termed SEC’sSEC’s action as intimidation. It argued that such activities would harm Ripple’s business relations with its foreign partners. Ripple CEO Brad Garlinghouse said that 95% of Ripple users are outside the U.S., so SEC’s actions will hurt Ripple’s business prospects. 

SEC accuses Ripple of violating the United States Securities Act of 1933.

CEO Brad Garlinghouse and co-founder Chris Larsen were able to prevent SEC from accessing their banking records. SEC is now asking Ripple the details of its legal advice regarding XRP’sXRP’s regulatory status. The genesis of the entire lawsuit was SEC’sSEC’s allegations that Ripple Labs raked in over $1 billion via the sale of XRP. It contravenes the United States Securities Act of 1933.

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