In its ongoing case against Ripple Labs, the US Securities and Exchange Commission (SEC) seeks to compel blockchain developer Ripple to produce its financial statements, claiming the documents contain relevant information to determine if Ripple broke the law.
The request comes after a summary ruling by Judge Analisa Torres that the programmatic sales of XRP tokens through crypto exchanges are not an unregistered securities offering, as the SEC alleges. According to the judge, only institutional token sales are an infraction (what the SEC seeks to prove).
Proving the infraction is difficult for the US financial regulator, as the latest request shows zero evidence from the SEC (currently) to show Ripple broke the law.
 The Targets in the Sights of the SEC
The letter, addressed to Southern District of New York Magistrate Judge Sarah Netburn, requested the judge to order Ripple to produce its financial statements for 2022-2023 and its post-complaint contracts on institutional sales. Also, the letter requested that the judge compel Ripple to answer an interrogatory setting about institutional XRP sale proceeds around the same period.
The SEC letter justifies the need for the statements and claims the documents are necessary to help Judge Analisa Torres determine whether Ripple did commit a regulatory infraction.
The discovery inquest might prove pivotal for the Ripple vs SEC case, as Ripple currently appears to have the upper hand from preliminary summary judgments. The SEC would seek to convince Judge Sarah to rule in its favor, hoping that financial documents and institutional sales contracts from Ripple Labs can prove wrongdoing by the blockchain developer in their longstanding dispute.
 How did Ripple Respond?
Ripple has since responded to the SEC filing, requesting an extension of the deadline for a response by two days. According to its letter, its response to the SEC is ordinarily due by January 17, but Ripple requests an extension by two business days to prepare the response.
In the same letter, Ripple consented to SEC’s prayer that any response from its side, if any, must come on or before January 24, 2024, as SEC’s timeframe fits comfortably into Ripple’s. Depending on the judge’s response to Ripple’s request, a response to the SEC filing should be ready by January 17 or 19.
Ripple Labs will oppose the discovery request, as is the standard procedure in all similar cases.Â
The opposition is not an admission of wrongdoing; a lot could go wrong if a firm of this size publishes its sensitive financial documents online, and it generally would want to avoid that.
 About the SEC vs Ripple Lawsuit
In 2020, the Securities and Exchange Commission (SEC) of the United States filed a lawsuit against two Ripple executives and Ripple Labs itself, alleging that the XRP token was an unregistered security at the time of its initial public offering, essentially accusing the blockchain development firm of selling unregistered securities worth several hundred million dollars.
Over time, the financial regulator dropped its lawsuit against the former CEO of Ripple Labs, Chris Larsen, and current CEO, Brad Garlinghouse, while keeping its complaints about the company.
However, it seems like the case is reaching an unfavorable end for the SEC, as summary judgment by Judge Analisa Torres essentially absolves Ripple of any wrongdoing, ruling that Ripple could only have committed securities fraud if it made institutional sales of the token, which remains unproven by the SEC.
The letter from the SEC to Judge Sarah Netburn of the Southern District of New York Magistrate Court is a move of last resort by the regulator to prove an infraction.
A win may not necessarily translate to a victory for the SEC in the underlying case; it would still have to prove from the documents that institutional sales of XRP tokens occurred, a theory that remains impractical.
 What Should We Expect?
The longstanding case between the SEC and Ripple is nearing its inevitable end, and that end might come quicker if the court declines the discovery request submitted by the SEC.
If the request is approved, on the other hand, Ripple would have to publicize the documents, which may cause the case to spiral into something even more convoluted than previously seen.Â
