Sealed Remedies Reply Filed, What’s Next?

In the latest from the XRP lawsuit between Ripple and the US Securities and Exchange Commission (SEC), the agency has filed its remedies reply brief under seal, signaling a significant advance in the case’s remedies phase. This stage focuses on determining the potential sanctions that the fintech company might face if the SEC is successful in proving its allegations that Ripple conducted unauthorized securities transactions involving its XRP cryptocurrency.

Ripple Vs. SEC: Detailed Timeline And Upcoming Events

James K. Filan, a former defense lawyer closely monitoring the case, updated the XRP community via X (formerly Twitter), stating, “The SEC has filed, under seal, its remedies reply brief & supporting exhibits. These documents are not yet public. Public, redacted versions will be filed by Wednesday, May 8, 2024. Other sealing-related filings will follow.”

This filing is a crucial procedural step in the ongoing litigation, initiating a series of legal maneuvers centered around the confidentiality and disclosure of sensitive materials. Following yesterday’s sealed filing, Ripple and the SEC will meet today, May 7, to discuss and determine the necessary redactions to the reply brief and related documents, involving both parties and any third parties. This session aims to determine what information remains under seal and what will be made accessible to the public.

Tomorrow, on May 8, the SEC is scheduled to release a public, redacted version of the reply brief along with any supporting exhibits not designated as Confidential or Highly Confidential under the current Protective Order. This release will only include those provisional redactions requested during the May 7 meet and confer.

Further sealing motions are planned for May 13, where all involved parties and third parties will file omnibus letter-motions to seal all materials related to the remedies-related briefing. This includes briefs, declarations, and supporting exhibits, followed by the submission of proposed redactions to these materials.

On May 20, oppositions to the May 13 sealing motions are due. The process stipulates that parties are also required to file public, redacted versions of all documents within 14 days following the court’s decisions on the omnibus sealing motions.

Financial Stakes And Ripple’s Defense

The stakes are notably high, with the SEC seeking fines and penalties totaling around $2 billion. Ripple’s counter-proposal suggests a maximum penalty of just $10 million. The fintech firm argues against the SEC’s proposed injunction, maintaining that it has instituted significant changes to avert future infractions.

Ripple’s opposition to the SEC’s demand for disgorgement is based on the claim that the regulator has not substantiated that Ripple’s activities caused monetary losses to institutional investors. Regarding civil penalties, Ripple calls for a substantial reduction, arguing that the SEC’s demands are disproportionate compared to penalties imposed in similar cases.

Currently, a critical battle is unfolding over the testimony of expert witness Andrea Fox. Ripple disputes the SEC’s characterization of Fox’s expert declaration. Ripple’s objection suggests that the SEC’s categorization of the testimony is flawed.

Jeremy Hogan, a legal expert from the XRP community, commented recently on the matter via X, saying, “I think the SEC will win this motion.” He noted that, based on past case outcomes, the court is likely to recognize Fox as an expert, thus permitting Ripple to depose her rather than striking her testimony from the record.

At press time, XRP traded at $0.53761.

Featured image from Shutterstock, chart from TradingView.com