SEC ‘Weaponized’ XRP Quarterly Reports in Lawsuit, Ripple Says

Brad Garlinghouse, the Chief Executive Officer of Ripple Labs, a payment protocol and exchange network, has slammed the US Securities and Exchange Commission for allegedly using the company’s quarterly reports about its native cryptocurrency, XRP, in the agency’s case against the crypto firm. Garlinghouse stated this today (Wednesday) in a Twitter post, quoting the company’s XRP quarterly report for the second quarter (Q2) of this year.

Ripple Criticizes SEC

In the Twitter post, the Ripple CEO noted that the company initiated the reports to “voluntarily” provide updates about its XRP holdings. However, the securities allegedly used them against the firm during the lawsuit process.

We began these reports to voluntarily provide updates given our XRP holdings. Sadly, they were used against us in the SEC lawsuit - however, we remain steadfast in our commitment to transparency but I suspect they’re going to look a bit different moving forward https://t.co/oANR6WCG09

“While published in a good faith effort at transparency, these quarterly reports have been weaponized against the company by the SEC. Ironic for an agency that touts transparency and disclosure,” Ripple further said in the latest quarterly report published on Monday. “Accordingly, Ripple is re-evaluating the role and contents of this report going forward and will have updates on that front in Q3 2023,” the firm added, reiterating its commitment to transparency.

Also commenting, John Deaton, a lawyer known for being vocal about the SEC vs Ripple case, tweeted on the issue, noting that “the SEC used the transparency of these reports against Ripple and its two executives.”

“As a private company, Ripple was under no obligation to share this info,” Deaton stated. “Other companies not only didn’t share token sales but intentionally disguised those transactions.”

It is absolutely true that the SEC used the transparency of these reports against Ripple and its two executives. As a private company, Ripple was under no obligation to share this info. Other companies not only didn’t share token sales, but intentionally disguised those… https://t.co/mbAO6feEfW

In mid-July, the US District Judge, Analisa Torres, delivered a landmark judgment on the SEC’s case against Ripple, ruling that the crypto firm’s sale of XRP tokens to retain investors on public exchanges did not violate US securities law, Finance Magnates reported. However, the court noted that the sale of the token to sophisticated investors amount to a contravention of federal securities law. The ruling followed years of the securities watchdog’s lawsuit against Ripple in a case that started in December 2020.

Ripple Addresses 'Misconceptions'

Meanwhile, in the XRP quarterly report quoted by Garlinghouse, Ripple addressed several “misconceptions” about the court ruling, including those that the judgment is a split decision and that the court’s decision means that XRP is a security in some situations but is not in others.

Specifically addressing the belief that the ruling was a split decision, the crypto firm noted that the court judgment “is a resounding win for Ripple and the industry more broadly.”

Moreover, Ripple in the report noted that its XRP holding jumped by about 4.4 million from 5.51 billion as of March 31, 2023, to 5.55 billion at the end of June this year. As a result, the total number of XPR locked in Ripple’s ledger escrows decreased by about 9 million to 41.9 billion at the end of June.

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