By
Steve Muchoki
April 19th, 2024
Both Ripple Labs execs have filed to squash SEC subpoenas to six banks that they provide personal financial information as part of the lawsuit.
Ripple Labs Chief Executive Officer Brad Garlinghouse and Executive Chairman Chris Larsen are currently in a row with the US Securities and Exchange Commission (SEC). The Ripple Labs executives are refusing a demand from the SEC to obtain their personal financial information.
The SEC is investigating Ripple Labs and has claimed that the company deliberately misled its investors. The Commission is also claiming that Ripple manipulated the price of XRP, thereby creating an information vacuum that deceived investors.
To further the ongoing lawsuit, the SEC is seeking personal information on both Garlinghouse and Larsen. The SEC’s demand requires that six banks disclose financial details on both persons. However, lawyers representing the executives have asked a federal judge for a protective order, which would dismiss the subpoenas received by the banks.
The involved banks are Silver Lake Bank, SVB Financial Group, Silvergate Bank, First Republic Bank, Citibank, and the Federal Reserve Bank of New York.
In the filing submitted to Hon. Sarah Netburn, lawyers argued that the demand for personal financial information is a “wholly inappropriate overreach.” The lawyers believe asking for this information is unnecessary because both defendants have already agreed to produce personal financial information that is “potentially relevant” to the case. They stated:
“…the Individual Defendants are not denying the SEC access to the financial information it might need. Specifically, [they] have agreed to produce…trading records relating to the sales of XRP that the SEC is challenging in this case, and…financial records concerning the compensation that they have received from Ripple. These records are the very most that the SEC should be permitted to obtain.”
SEC Still Wants Information from Ripple Labs Execs
The SEC is asking for this information because it believes that the defendants might be culpable. The Commission states that they both ignored legal advice that XRP could be regarded as a security. The SEC also believes that both Garlinghouse and Larsen personally made $600 million.
The Commission states that the men may have deliberately ignored other suggestions that could have reduced their personal earnings. Basically, any pointer to a possible overlooking of proper operations could spell doom for Larsen and Garlinghouse.
However, the filing wholly refutes the SEC’s claim that the men profited from the company. It states that nothing suggests that the “Individual Defendants’ personal finances were intermingled with those of Ripple Labs Inc”. According to the Ripple team, there is no “coherent explanation” for why the SEC wants the information.
As part of its argument, the filing also specifies that Ripple has tried, without success, to settle the matter. Suggestively, the SEC does not want this. Finally, the lawyers are also arguing that asking for this information interferes with both parties’ privacy interests.