Ripple executives ask court to block U.S. SEC subpoenas for bank records
Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen have asked a federal court to block subpoenas issued by the U.S. Securities and Exchange Commission seeking their personal bank records. The SEC filed a lawsuit against Ripple last year, alleging that the blockchain company failed to register its native token, XRP, as a security.
Larsen and Garlinghouse were named as defendants in the case, which has significantly impacted the San Francisco–based company and its token. XRP’s market position has slipped, and the company recently announced it was ending its partnership with MoneyGram.
The SEC alleges that the two executives misled investors and sold unregistered XRP tokens. Earlier this week, the agency served subpoenas on six banks to obtain eight years of personal financial records for both executives. Through their attorneys, Larsen and Garlinghouse sent a letter to U.S. District Judge Analisa Torres asking that the subpoenas be quashed, calling the requests irrelevant and “wholly improper.”
The executives argue that the lawsuit does not involve alleged fraud and therefore does not justify the wide-ranging financial disclosures the regulator seeks. They say there is no rational basis for delving into past banking records because their personal finances were not intertwined with Ripple’s corporate finances.
They expressed frustration that the SEC is demanding exhaustive personal financial details, citing examples such as requests for information about “how much money they spend at the grocery store each week.” While they said they are willing to produce financial records directly related to XRP transactions and documents about Ripple compensation, the SEC rejected those offers as insufficient.
“The SEC has not offered and cannot provide a coherent explanation as to why it is entitled to this information,” their legal team said.
The SEC’s complaint asserts that the two executives repeatedly disregarded legal advice recommending registration of XRP. According to the agency, advisers warned that XRP could be classified as an investment contract—and thus a security—but the executives allegedly ignored that advice and proceeded to sell tokens, generating roughly $600 million in proceeds.
Prior to this week’s developments, both Larsen and Garlinghouse had filed separate letters with the federal court signaling their intent to move to dismiss the case.