The U.S. Securities and Exchange Commission has been acting behind Ripple's back to go after its foreign partners, has alleged a new court motion from the San Francisco-based firm. Ripple claims that the regulator has been engaging in intimidation tactics to scare its partners. This constitutes a violation of federal rules, the blockchain payments company has claimed. This comes just days after Ripple's top executives, and defendants in the case, filed a motion to dismiss the SEC's lawsuit.
Ripple's legal team filed the motion in the Southern District of New York. "We write on behalf of the defendants … regarding the SEC's undisclosed and pervasive use of the SEC's pre-litigation investigative tools to conduct discovery in this lawsuit," the motion states.
Ripple claims that the SEC has acknowledged that it made at least 11 MOU requests seeking documents from foreign entities. Many of these entities are business partners of Ripple. Involving local regulators "is not only inappropriate, but also amounts to an intimidation tactic that has the effect of dissuading those entities from continuing to do business with Ripple."
The SEC formally agreed to share with Ripple the entities it has contacted, but has not done so yet. Furthermore, the watchdog refuses to stop this behavior, the company claims.
“The defendants do not dispute the SEC's right to conduct informal interviews, but rather its ability to issue a mandatory process, beyond the discovery allowed by Federal Rules. The MOU process is available only to the SEC, not to Defendants, and its use creates a fundamental inequity in litigation. Neither party should be allowed to exercise powers over the discovery process that the other cannot. "
Ripple accumulates more partners despite SEC lawsuit
The motion further alleges that the SEC has refused to give notice to Ripple and its executives, violating federal rules.
“While the SEC has agreed to share the“ gist ”of its MOU requests, it refuses to submit the requests themselves or related correspondence with foreign regulators, claiming privilege, and also refuses to notify Defendants of any request. future ”.
The company asked Judge Sarah Netburn to order the SEC to withdraw its pending MOU requests from foreign regulators. He also wants the judge to order the watchdog to produce the communications it has had with foreign regulators about the Ripple case.
Despite its legal troubles, Ripple has continued to accumulate more partners globally. The latest partnership is with Novatti Group, an Australian payments company that will now use XRP for cross-border payments.
In announcing the partnership on its website, Ripple wrote:
"The partnership initially focuses on remittances between Australia and the Philippines… Live now, Novatti expects to process several thousand transactions per month through RippleNet and plans to rapidly scale the service to more financial technology clients and other Southeast Asian countries.
Brad Garlinghouse, CEO of Ripple, revealed in a interview On CNN earlier this month that despite the SEC's lawsuit, the firm has added more than 20 new partners this year. It also revealed that more than 90% of the firm's business partners are outside the US.