Ripple is now required to produce terabytes of Slack messages to the SEC that were previously withheld due to an apparent data error.
United States Magistrate Judge Sarah Netburn has ordered Ripple to produce 1 million missing Slack messages among employees that the Securities and Exchange Commission has sought to access.
Despite Ripple’s protestations that complying would cost up to $1 million, the judge deemed the messages critical and unique evidence for the SEC’s ongoing case against the multi-billion-dollar company for selling unregistered securities.
The SEC filed a suit against Ripple Labs and its initial and current CEOs, Christian Larsen and Bradley Garlinghouse, for selling XRP as an unregistered security on Dec. 20.
According to Law360, in the original motion to compel Ripple from Aug. 9, the SEC argued that the messages among Ripple employees were “relevant to the parties’ claims and defenses and proportional to the needs of the case.” It also said that Ripple should deliver all messages from 22 email custodians in addition to the Slack messages.
Last month, the SEC told Judge Netburn that the Slack messages Ripple produced appeared to be incomplete. Ripple initially denied this claim but revised its statement by claiming it was a data processing mistake that resulted in the company only producing a small amount of the relevant messages and that more than 1 million messages were missing.
The SEC contended that Ripple’s failure to produce the complete Slack records was “highly prejudicial,” given those messages the SEC had received showed the remaining would be highly relevant:
“These messages include: (a) discussions about Ripple’s desire to create speculative trading in XRP, (b) the effect of Ripple announcements and efforts on, and Ripple’s concerns as to, the price of XRP, the relationship and central importance of XRP sales to Ripple’s overall business, and (d) the regulatory status of XRP.”
Related: Ripple files motion to expose XRP holdings of SEC employees
Ripple argued that it was unfair and unreasonable to produce the messages at a cost of up to $1 million over many months. Judge Netburn responded that the cost to Ripple in producing the messages was outweighed by their importance to the case.
“Any burden to Ripple is outweighed by its previous agreement to produce the relevant Slack messages, the relative resources of the parties, and the amount in controversy,” Judge Netburn said.
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