The ongoing legal dispute between Ripple, a cryptocurrency company, and the United States Securities and Exchange Commission (SEC) is garnering significant attention from people in the cryptocurrency industry and beyond. Recently, the SEC submitted a new argument to support their summary judgment motion in court.
The regulator filed a letter of supplemental authority to Judge Analisa Torres, as reported by James K. Filan, a prominent pro-XRP U.S. defense lawyer, and commentator on the case. The contents of the letter have not been made public, but it is expected to provide additional support to the SEC’s motion for summary judgment.
The SEC’s latest filing refers to an opinion released on April 7 by a District of Massachusetts court. This opinion granted the SEC’s motion for summary judgment and denied the cross-motion for summary judgment by Commonwealth Equity Services, a brokerage firm that was the defendant in that case.
This latest development is part of the ongoing legal battle between Ripple and the SEC, which began in December 2020 when the SEC filed a lawsuit against Ripple alleging that the company had conducted an unregistered securities offering through the sale of XRP tokens. The outcome of this case could have significant implications for the cryptocurrency industry and how it is regulated in the future.
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“Fair Notice” Argument
The SEC has pointed to a recent court decision in Massachusetts to support its case against Ripple, as the case also involves alleged violations of federal securities laws. The court decision dismissed the “fair notice” argument made by defendants in both cases, including Commonwealth, which was the subject of the lawsuit.
The SEC argues that the Massachusetts court’s ruling backs up its stance that a 50-year-old Supreme Court precedent should be enough to provide “fair notice” in the Ripple case. The SEC’s legal counsel, Benjamin J. Hanauer, wrote in a letter that the Massachusetts court’s decision adds more weight to the SEC’s position and reinforces the rejection of Ripple’s “fair notice” defense, thus supporting the SEC’s motion for summary judgment.
Legal Experts Weigh in on the Issue
On April 12, lawyer Bill Morgan dismissed the SEC’s latest letter, stating that the cases were not similar and there was no cause for concern. In a tweet, he explained his position.
Meanwhile, banking law expert Todd Phillips has pointed out issues with using the Howey Test to determine investment contracts. He argues that relying on this test could harm the SEC’s position in the “war against crypto,” as reported by Finbold on April 10.
Moreover, Ripple’s legal team has dismissed the arguments put forth in the SEC’s latest filing. Attorney Jeremy Hogan, who is well-known in legal circles, has raised a concern regarding the case’s technological aspects. If Judge Torres acknowledges the concept of decentralization and technology, Ripple may emerge victorious in the case.
The filing has resulted in a 3.1% drop in Ripple’s market value, and it is currently trading at $0.50.