A U.S. judge has ordered Ripple Labs to provide its historical financial statements, responding to a longstanding request from the Securities and Exchange Commission (SEC), according to court documents.
SEC initiated legal action against Ripple over three years ago, accusing the company of conducting unregistered sales of its XRP cryptocurrency.
Ripple to Disclose Financial Records
In a court filing on Monday, Judge Sarah Netburn ruled in favor of the Securities and Exchange Commission (SEC), directing Ripple Labs to disclose its financial records for the years 2022-2023.
The decision also requires Ripple to divulge details regarding the proceeds from institutional sales of XRP as part of the process to determine the necessity and fairness of a potential injunction.
Ripple had contested the SEC’s request, arguing that the company’s financial status was not pertinent to the case.
Nonetheless, the court dismissed this argument, stating there was “no basis for short-circuiting that inquiry by denying access to readily available information that may be probative to the remedy stage.”
Notably, this ruling comes after Ripple challenged the SEC’s demand for the release of its financial documents last month.
Ripple-SEC Conflict Continues
The conflict between Ripple and the SEC has been ongoing since 2020, when the regulator filed a lawsuit against the fintech firm, alleging $1.3 billion in unregistered securities sales.
However, Ripple achieved a partial victory in court last year, with a judge ruling that programmatic sales of XRP to retail investors did not constitute securities transactions.
Despite this, the judge determined that $728 million in contracts for institutional sales did indeed represent unregistered securities sales, a decision that investors and Ripple Labs have viewed as a win for the broader cryptocurrency industry.
Ripple CEO Brad Garlinghouse has publicly criticized the SEC, particularly targeting SEC Chairman Gary Gensler, labeling him a “political liability” and critiquing his regulatory approach towards the crypto sector as ineffective.