SEC Disagrees With Ripple’s Plea to Keep its Financial Data Discrete

The United States Securities and Exchange Commission (SEC) and Ripple Labs are engaged in a legal dispute over Ripple’s move to seal specific bank records. This resistance arises from Ripple’s desire to maintain the privacy of some financial information in the face of scrutiny surrounding their cryptocurrency, XRP.

In December 2020, the SEC filed a complaint against Ripple, claiming that the company sold XRP coins in an unregistered securities offering, raising more than  $1.3 billion. These accusations have been repeatedly refuted by Ripple, who contends that XRP belongs in the category of digital currency rather than securities.

This classification is important because it establishes Ripple Labs’ obligations and the legal framework that applies to XRP. The company claims that making these facts available to the public could hurt its ability to compete and breach privacy laws.

The legal team at Ripple argues that revealing complex financial information such as revenue models, pricing schemes, and profit margins would put the business at a competitive disadvantage in the fiercely competitive cryptocurrency space. 

SEC Insists on Disclosing Ripple’s Data, Says it Has Useful Information

The SEC argues in its opposition brief that openness is crucial, especially in a big case involving the public interest. The regulatory authority contends that in order to comprehend the matter fully, it is imperative to have access to the financial data that Ripple is trying to hide.

The SEC asserts that these documents may offer crucial information about Ripple’s business practices and the characteristics of XRP’s distribution, thereby supporting the agency’s position that XRP is a security. The regulatory authority contends that permitting Ripple to withhold this information might create a risky precedent that would undermine the level of transparency necessary for the financial markets.

Interestingly, investor sentiment regarding XRP has remained the same despite the revelation of the SEC’s resistance. A market observer, Divyanshi Seth, has explained that the market believes the legal dispute is almost over, which would work to Ripple’s advantage.

SEC Says It’s Only Carrying Out it’s Constitutional Obligation, Maintains Stand 

Seth also added that if the SEC wins its case, other cryptocurrencies may be subject to more stringent regulatory scrutiny, especially if they have held Initial Coin Offerings (ICOs) similar to Ripple’s XRP sales. If Ripple’s situation improves, other cryptocurrency projects might feel more confident questioning regulatory classifications and asking regulatory agencies for more precise instructions.

The SEC argued that its insistence on the documents is part of its constitutional obligation to protect investors. The commission also says that by making the company’s financial record public, it will be able to guarantee accountability and transparency throughout the XRP sales process—which the commission has termed unregistered security. 

Should the SEC succeed in having its way, Ripple may be compelled to publish its sensitive financial data. The SEC revealed that the terms of the contract, the financial numbers, and other relevant details are important to the needed solution and serve as the court’s basis for determining appropriate penalties.

Before now, Ripple had filed a motion to keep this information as discrete as possible. Ripple had cited a potential risk to its business operations should this information be made for public consumption.

SEC Says Disputed Information is Already In Public Domain, Ripple Frowns

According to Jonathan Bilich, Ripple’s Chief Financial Officer, there’s a declaration supporting the argument that seals the agreed financial terms of the existing contractual agreements made with a particular third party in a business arrangement.

SEC has insisted that Ripple has yet to provide enough proof to convince them that their claim that this information will endanger their operations – and has yet to submit it to the jury, too. SEC also argued that most of the financial information and evidence the company is talking about is already outdated, while the rest are already out in the public domain.

However, the price of XRP has recorded a major increase, trading at $0.535139 with a 24-hour trading volume of $1,318,286,876, a 50% jump from its initial position. Data from CoinMarketCap established the market capitalization at $29,587,278,792 after getting ranked #7 on the top-performing cryptocurrency chart.