SEC v. Ripple: Ripple Founders Argue SEC Cherry Picked Their Comments and Public Appearance

BACKGROUND

I. Factual Background

C. Defendants’ XRP Marketing Campaign

The SEC alleges that “in 2013 Defendants began extensive, years-long marketing efforts representing they would search for purported ‘use’ and ‘value’ for XRP—and casting XRP as an opportunity to invest in those efforts.” SEC Opp. at 4, ECF No. 841. The SEC points to a wide range of statements, including informational brochures, internal talking points, public blog posts, statements on social media, videos, interviews with various Ripple employees, and more. Defendants dispute the SEC’s factual narrative and argue that the SEC “cherry-picks excerpts from documents with many authors and from public statements of many speakers, made at many points across an eight-year period of time to many audiences.” Defs. Opp. at 10, ECF No. 828. [8]

Since at least 2013, Ripple has prepared and distributed documents that describe the company’s operations, the XRP trading market, and the XRP Ledger. For example, in 2013 and 2014, Ripple created three brochures: a “Ripple for Gateways” brochure, a “Ripple Primer,” and a “Deep Dive for Finance Professionals.” Defs. 56.1 Resp. ¶¶ 59–60, 171. These documents were distributed publicly to prospective and existing XRP investors and outline, among other things, the relationship between XRP and Ripple’s business model. Id. Ripple circulated versions of the “Gateways” brochure to more than one hundred third parties, id. ¶ 172; the “Primer” had “widespread distribution,” id. ¶ 178; and the “Deep Dive” was posted on Ripple’s website and sent to over one hundred people, id. ¶¶ 185–86. Later, starting at the end of 2016, Ripple began to publish on its website quarterly “XRP Market Reports,” which were intended to provide “clarity and visibility” about Ripple’s market activities. Id. ¶¶ 500–01.

Ripple and its senior leaders used a variety of social media platforms—including Twitter, Facebook, Reddit, and XRP Chat, an online forum described as “The Largest XRP Crypto Community Forum”—to communicate about XRP and Ripple. Defs. 56.1 Resp. ¶¶ 77, 192; see, e.g., id. ¶¶ 391–96, 401–08, 425, 437–40. Ripple officials also spoke in interviews about the company and its relationship to XRP. For instance, Larsen gave interviews in which he discussed XRP, e.g., id. ¶¶ 371, 377, and Garlinghouse was interviewed by media outlets such as the Financial Times, Bloomberg, and CNBC, spoke with organizations like the Economic Club of New York, and participated at conferences such as DC Fintech, in which he described Ripple’s operations and the XRP market, e.g., id. ¶¶ 252, 263, 269, 387, 444, 446.

[8] The SEC’s Rule 56.1 statement contains over 1,600 purported facts—many of which are disputed by Defendants— and cites over 900 exhibits. See generally Defs. 56.1 Resp. The Court highlights below only those documents and statements directly relevant to this order.