Ripple Labs has asked a U.S. district court judge to deny the U.S. Securities and Exchange Commission’s request for a 60-day extension to the discovery schedule, citing an “existential threat” to the company’s business in the country, according to a legal filing.
- Many U.S.-based cryptocurrency exchanges delisted or suspended XRP trading following the SEC’s lawsuit, affecting the liquidity of XRP — which is used as a bridge currency for cross-border payments.
- “Today, XRP is essentially illiquid in the United States, practically eliminating the possibility of [On-Demand Liquidity] transfers into or out of the United States. XRP’s liquidity has also been hampered in other jurisdictions, damaging Ripple’s ability to develop and market ODL worldwide,” wrote Ripple’s defense attorneys in a June 8 letter to U.S. District Court Judge Analisa Torres. “Every additional day this suit is pending is a day in which the XRP markets remain improperly frozen in the United States and Ripple’s business is unfairly hampered.”
- “An extension of the discovery schedule in this case would cause tremendous prejudice to Ripple. In addition, the SEC has not met its burden of showing that there is good cause to extend the schedule: the examples of ongoing discovery issues that it cites are largely attributable to its own unexplained delays in serving document requests, and it does not and cannot argue that it will not be possible to complete discovery on the existing schedule despite reasonable diligence,” Ripple’s attorneys wrote.
- Earlier, the SEC — which filed its lawsuit against Ripple and its top two executives in December 2020 — asked for a 60-day extension of the deadlines for discovery, the process by which opposing parties to a lawsuit seek or try to block information from each other. If approved, the extension would end fact and expert discovery on Aug. 31 and Oct. 15 respectively. A decision has yet to be made on the SEC’s request.
- Separately, the SEC rebutted Ripple’s assertion that the SEC did not provide fair notice that XRP would be considered a security. The SEC has argued that both Ripple and the public were already put on notice, given the agency’s more than 70 enforcement actions against other crypto companies prior to suing Ripple. But Ripple has asked the court to dismiss the SEC’s use of the data, saying the SEC’s past enforcement actions either did not involve digital assets companies or were related initial coin offerings (ICOs) — both of which do not apply to Ripple.
- In its letter to Judge Analisa Torres, the SEC disagreed with Ripple, writing: “Howey and its progeny’s ‘flexible rather than … static principle,’… would be nullified by a ruling that a fair notice defense can defeat any claim involving an investment product that is not identical to one previously deemed a security. The Court should reject the invitation to issue such a ruling.”