In a significant legal manoeuvre, Ripple Labs Inc. has filed a motion to strike new expert materials submitted by the Securities and Exchange Commission (SEC) in the ongoing court saga that has captured significant investor attention. 

Let’s take a look at this latest development which adds another layer of complexity to the high-profile case, as Ripple challenges the timing and appropriateness of the SEC’s recent actions.

Ripple’s Motion: Challenging SEC’s Timing and Strategy

Ripple Labs argues that the SEC’s introduction of a new expert declaration and accompanying exhibits, prepared by Andrea Fox, after the agreed remedies discovery deadline constitutes unfair legal practice. 

This declaration, submitted in support of the SEC’s motion for remedies and entry of final judgment, is being contested by Ripple on grounds of untimeliness and non-disclosure during the designated discovery period.

Andrea Fox, an Assistant Chief Accountant in the SEC’s Division of Enforcement, provided detailed accounting analyses aimed at calculating the net profits Ripple allegedly gained from what the court previously ruled as unauthorized securities sales of XRP. 

Ripple contends that Fox’s input clearly extends beyond mere summarization of data, engaging in substantive accounting judgments without prior disclosure as an expert witness. “This is precisely the type of ‘sandbagging’ that Rule 37(c)(1) is designed to prevent,” Ripple’s legal team emphasized, citing Abraham v. Leigh as a precedent.

The SEC’s Position and Ripple’s Rebuttal

During the legal proceedings, the SEC categorized Fox not as a factual or expert witness but as a “summary witness.” Ripple, however, argues that her deep dive into financial records and the application of specialized accounting knowledge squarely positions her as an expert witness, necessitating earlier disclosure as per Federal Rule of Civil Procedure 26(a). 

Ripple’s filing stresses the procedural disadvantage imposed by the SEC’s timing, which deprived them of the opportunity for a thorough cross-examination of Fox’s findings and to present a rebuttal report. 

Such actions, according to Ripple, necessitate striking the late disclosure to prevent prejudicial impacts on their defence and the integrity of the legal process.

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