Amid the ongoing Ripple lawsuit, lawyer Bill Morgan has provided a speculative take on the SEC's stance regarding the blockchain firm's On-Demand Liquidity (ODL) sales using XRP. The U.S. Securities and Exchange Commission (SEC) recently opposed Ripple's motion to seal and redact evidence related to remedies briefing and documents. Additionally, the SEC urged the court to disclose Ripple's business details from the agency's March 22 remedies briefing.
Ripple had previously requested that financial reports, details of post-complaint XRP institutional sales, and other sensitive information remain confidential due to the high risks involved. In this context, Bill Morgan, a pro-XRP advocate, emphasized that the SEC already knows that Ripple’s ODL sales are not investment contracts.
SEC Highlights Ripple ODL Sales in Recent Filing
Bill Morgan shared a snapshot from the SEC’s latest response, which stated, “The same is true for Ripple’s aged securities offering and sales information. Ripple wants to hide the extent to which it offered XRP at discriminatory prices. But the period when Ripple was offering discounts goes back to 2014 and ended in December 2020.”
The filing continued, “Ripple has not shown how the discounts it offered four years ago or more would matter, particularly since Ripple seeks to avoid remedies by claiming it ‘has changed the way it sells XRP and changed its contracts.’” The SEC emphasized that Ripple’s current contracts are not under scrutiny, specifying, “Indeed, the contracts at issue are not ODL contracts—the only type of Institutional Sales contracts Ripple claims it enters into today… none of Ripple’s current contracts contain lockups. The redactions the SEC opposes thus do not reveal ‘long-term business plans of any kind.’”
Lawyer Explains SEC’s Position on ODL Sales
Morgan elaborated on the SEC’s stance, explaining, “The SEC clarifies that none of the sales to institutions with discounts were ODL contracts.” He added, “The SEC would have reviewed the ODL contracts and observed that they do not have discounts or the features referred to in the summary judgment that made institutional buyer contracts to be investment contracts according to judge Torres.”
Morgan pointed out a key distinction in the nature of ODL contracts: these contracts require customers to buy XRP at market price and use the tokens in ODL transactions. Moreover, customers agree not to hold them as investments. He questioned why Judge Torres categorized these contracts similarly to other institutional agreements, speculating, “It remains a mystery why Judge Torres lumped them in with the other contracts with institutions.” He further noted that the SEC likely knows that its stance on the ODL sales is incorrect, stating, “I bet SEC knows the ODL contracts are not investment contracts.”
SEC Opposes Ripple's Motion to Seal
On Monday, May 20, the SEC filed a response opposing part of Ripple’s motion to seal and redact certain documents. The SEC argues that Ripple’s attempt to "conceal financial and securities sales information" is unlawful, as this information is crucial for the remedies phase and public understanding of the penalties involved.
Ripple seeks to redact details such as the amount of its current assets, recent sales figures, revenues and expenses, and discounts offered to institutional investors. However, the SEC contends that these details are essential for determining penalties, injunctive relief, disgorgement, and assessing investor harm. They argue that Ripple has not provided sufficient evidence that making this information public would cause significant harm.
Furthermore, the SEC states that the financial information in question is outdated and that some of it is already publicly available. The regulator asserts that Ripple’s reliance on previous court sealing approvals does not apply to the current situation. The SEC maintains that transparency is necessary for the court’s decisions and public accountability.
This ongoing legal battle between the SEC and Ripple underscores the complexities of cryptocurrency regulation and the definitions of securities, with significant implications for the future of digital assets.
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