Something to hide? – Ripple leadership rejects inspection of private finances
The two defendants do not think full access to their private financial records is relevant, but the Securities and Exchange Commission (SEC) disagrees.
Ripple CEOs Bradley Garlinghouse and Christian Larsen are refusing to allow the US Securities and Exchange Commission (SEC) to see the leadership duo’s private financial records as part of its Bitcoin Millionaire investigation into the crypto payment service provider.
The main allegation in the lawsuit is that the company’s proprietary cryptocurrency XRP constitutes an unlawful sale of securities. However, the regulator recently added that Garlinghouse and Larsen are alleged to have privately enriched themselves with it and deliberately misled investors.
On 11 March, lawyers for the two Ripple directors have now applied for the protection of their private financial records. At the same time, the court was asked to declare the information disclosure orders filed by the authority with six banks null and void.
Lawyers for Garlinghouse and Larsen argue that the SEC is exceeding the scope of its investigation. The suggestion that the defendants commingled their personal finances with those of Ripple Labs would be baseless. Accordingly, the motion states:
„The SEC’s attempt to gain access to Defendants‘ private financial information in a proceeding that does not involve fraud and in which Defendants have agreed to produce all relevant information regarding the relevant transactions is an unreasonable overstep of its jurisdiction.“
The „relevant transactions“ here mean the sale of 14.6 billion XRP, which was equivalent to US$1.38 billion when the investigation began.
In the meantime, these crypto assets would be valued at 6.5 billion US dollars
The defence of Garlinghouse and Larsen emphasises their clients‘ willingness to cooperate with regard to documents concerning the sale of XRP. Thus, they would be willing to submit all necessary documents, even those concerning their remuneration.
„Specifically, the Individual Defendants have agreed to produce those documents related to the trading of XRP and those demonstrating the compensation they received from Ripple,“ the lawyers write.
Financial documents on unrelated business activities and private expenses would thus not be relevant for the trial. For this reason, the defence concludes by requesting:
„The requested documents would provide insight into everything, both unrelated business activity and what the defendants buy for food.“
The information disclosure orders filed by the SEC with Garlinghouse’s and Larsen’s banks are said to provide insight into all transaction data from their private bank accounts.
However, there are also voices that believe the SEC’s demand is justified. Lawyer Preston Byrne told Cointelegraph that authorities often get far-reaching injunctions approved by the courts because the authorities have better means to carry out the relevant investigations than the court itself. To this end, Byrne explains:
„The SEC is allowed to issue an information disclosure order for any valid reason. As a rule, the courts allow the authorities extensive power to obtain information, which is justified by the fact that the authorities can investigate better than the respective court. The SEC’s orders may therefore be quite far-reaching and intrusive.“