The United States Securities and Exchange Commission (SEC) and Ripple, the fintech company behind the third-largest cryptocurrency, XRP, have clearly stated that there will not be any settlement on the current lawsuit against Ripple prior to the official trial date.
No Prospect For Settlement
Both parties made this statement in a discovery letter dated February 15, 2021, which was addressed to Judge Analisa Torres. In the document, both the SEC and Ripple said that they “do not believe there is a prospect for settlement at this time” since they had earlier deliberated on the issue.
They also added that the discussions were made under the “previous administration” with several SEC department directors who are currently no longer with the SEC, considering that the former chairman Jay Clayton left the regulatory body late last year and the chairman-designate, Gary Gensler, is yet to be inaugurated.
There were also a few disputes regarding the discovery for the trial, as both parties debated on the evidence, witnesses, and information that they will be presenting to the court.
In the letter, the SEC said:
“Ripple and Larsen received two legal memos warning them that there was some risk that XRP would be considered ‘investment contracts’ and therefore securities under the federal securities laws.”
However, Ripple disputed this saying that the “legal memos” had identified XRP not as a security but as “a convertible virtual asset.”
The SEC then added that it is striving to take five confirmations beyond the 10 normally allowed over allegations, adding that it may ask the court to compel Ripple to provide documents and relevant deposition testimony to back its argument.
Interestingly, the fintech company has refused to comply with this demand, saying that the documents fall under attorney-client privilege adding that the SEC’s request is “improper and lacks legal foundation.”
Deadline For Discovery Phase
The SEC and Ripple saga began in December 2020, when the financial regulator sued Ripple for conducting unauthorized securities sales, which was termed a violation of federal securities laws.
The SEC had claimed that the company’s CEO Brad Garlinghouse and Chairman, Chris Larsen, sold XRP worth more than $1 billion to investors without registering the digital asset as a security.
The first pretrial conference for the case is set to take place on February 22. The letter added that both parties have agreed to August 16, 2021, as the deadline for the discovery phase, during which they will assemble all evidence and argument.