A recent court ruling further weakens a key defense put forward by tech company Ripple Labs in its current legal battle with the US Securities and Exchange Commission (SEC), as the regulator has argued before a federal judge.
In a letter sent on April 11 to US District Judge Analisa Torres, who is overseeing the SEC’s case against Ripple Labs, the SEC highlighted the judge’s opinion in a separate enforcement action it won against investment advisory firm Commonwealth Equity Services.
In that case, long-standing judicial precedent was considered to provide sufficient “fair notice.”
#XRPCommunity #SECGov v. #Ripple #XRP SEC files Letter of Supplemental Authority in further Support of its Motion for Summary Judgment. https://t.co/rdzW3Q6SIT
— James K. Filan (@FilanLaw) April 11, 2023
The SEC files a supplemental letter of authority in further support of its motion for summary judgment.
The SEC argued that Longstanding Supreme Court precedent, which gave rise to the Howey test – which is used to determine what constitutes a security – gives Ripple Labs fair notice as to what a security is, just as it had the precedent mentioned in the Commonwealth case.
The SEC added that its case with Commonwealth provides “additional authority” to reject Ripple’s fair notice defense.
Ripple’s argument that the SEC had failed to provide it with fair notice before suing it for committing securities fraud in December 2020 is seen as one of its key defenses.
For their part, many observers, such as crypto exchange Coinbase, believe the defense is a winner, legal experts such as John Deaton have a different opinion.
The FAIR NOTICE DEFENSE is not what a lot of people think it is. I see a lot of comments about how @Ripple‘s FND is a slam dunk and Ripple and #XRP will win. Make no mistake about it, Ripple hopes the judge never decides the FND. #XRPHolders would prefer no decision on the FND.
—John E Deaton (@JohnEDeaton1) July 2, 2022
The FAIR NOTICE DEFENSE is not what many people think it is. I see a lot of comments about how Ripple’s defense is decisive and Ripple and XRP will win. Make no mistake: Ripple hopes the judge will never rule on the fair notice defense. XRP holders would prefer no decision on notification.
Deaton has previously noted that the fair notice defense only comes into play if the judge decides that Ripple’s XRP token (XRP) was a security at any time between 2013 and the present.. Deaton believes that Ripple Lab’s best chance lies in convincing the judge that XRP is not a security based on the Howey test.
The SEC is arguing all #XRP are securities because #XRP itself represents all of Ripples efforts (yes, they are making up as they go). We need the judge ⚖️ to declare today’s token NOT a security. We need to win on a strict Howey analysis. https://t.co/g8ea78R0es
—John E Deaton (@JohnEDeaton1) July 2, 2022
The SEC is arguing that all XRP is securities because XRP itself represents all the efforts of Ripples (yes, they are making it up as they go along). We need the judge ⚖️ to declare that today’s token is NOT a security. We need to win with a strict Howey analysis.
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