SEC Seeks to Limit Expert Testimony in Ripple Case

The Securities and Exchange Commission (SEC) has sought leave to file an omnibus motion that would limit expert testimony in its case against Ripple.

The plaintiff wants to limit the testimony to 10 experts retained by Ripple. An omnibus motion is a type of legal motion with multiple requests. Legal motions enable the parties to introduce or bring in other issues related to the case in a systematic manner.

The SEC has requested permission to write up to 120 pages. Ripple has not objected to the filing — so long as they are allowed to file a response that has the same page limit. 

It is a contentious development in an already heated case that has frequently made the headlines. A decision on the motion is due on July 12.

In May, the SEC filed to protect important documents related to the case. The court also denied an SEC motion to strike Ripple’s fair defense.

SEC alleges Ripple sold unregistered securities to raise funds

The SEC filed a lawsuit against Ripple and its leadership in Dec 2020 accusing the company of selling unregistered securities in the guise of XRP to raise funds, in contravention of Section 5 of the Securities Act of 1933.

XRP is a cryptocurrency created by Ripple Labs to serve as the native cryptocurrency for its payment processing platform. 

The SEC’s Enforcement Division alleges Ripple, its co-founder Christian Larsen and current CEO Brad Garlinghouse failed to register their offer and sale of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business.

The SEC has had previous success pursuing cryptocurrency companies for the sale of unregistered securities. Such examples include the Telegram TON token, Salt Blockchain, BitClave, and BCOT. 

One Ripple lawyer claimed in April that the SEC would target crypto exchanges soon. It is unclear if this will actually happen, but the authority has been becoming more forceful with its actions.