Covering the U.S. Securities and Exchange Commission’s (SEC) ill-conceived enforcement action against San Francisco-based blockchain company Ripple is never dull, and Friday offered yet another development in the suit.
In court documents, Ripple argued that the recent U.S. Supreme Court ruling in Bittner v. United States buttresses their fair notice argument.
How Supreme Court Ruling Bolsters Ripple’s Defense
Ripple on Friday filed a supplemental letter in the U.S. District Court supporting its motion in the ongoing lawsuit with the SEC.
Ripple noted that the Tuesday Supreme Court verdict in the Bittner case, which restricts the government’s ability to impose penalties on American taxpayers who do not report foreign bank accounts, stressed that the SEC failed to provide “fair notice” prior to bringing its enforcement action.
The Supreme Court stated in the Bittner case that “a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed.”
Throughout the pre-trial phase of the SEC v. XRP lawsuit, Ripple’s lawyers established that the SEC denied fair notice not just on XRP but crypto assets in general. When Ripple filed its intent to submit a fair notice defense, the SEC launched a series of frantic filings to try and stop the company. The court, however, later permitted Ripple to explain its fair notice defense.
This particular defense argues that the SEC did not notify Ripple that its actions violated the law before it took legal action. The firm contended that the American top financial cop failed to formulate a clear framework for the fast-growing crypto industry relating to the application of securities laws, thus causing regulatory uncertainty in the market.
Ripple has asked presiding judge Analisa Torres to consider the Supreme Court decision at the time of ruling whether Ripple, along with its current and former CEOs Brad Garlinghouse and Chris Larsen, respectively, broke the law by raising over $1.3 billion after selling the XRP cryptocurrency as unregistered securities.
Will Ripple Beat SEC In Court With Groundbreaking Update?
Founder of crypto legal news outlet Crypto-Law John E. Deaton, who is also amicus curiae in the XRP suit, recently spoke about the market onlookers speculating that Ripple filed this letter now because they know the SEC will prevail. Deaton notes that the U.S. Supreme Court ruling came just four days ago. He claims that this court decision corroborates Ripple’s assertion that the lack of fair notice breaks the Due Process clause of the United States Constitution.
If District Judge Torres decides that Ripple sold XRP as an unregistered security, this recent Supreme Court ruling gives the company’s fair notice defense “a few more teeth”, according to Deaton.
The attorney reiterated his belief that the current Supreme Court would rule in Ripple’s favour. While the West Virginia EPA lawsuit alone is reason to believe Ripple will ultimately win the drawn-out legal battle, the latest ruling from the Supreme Court is the proverbial cherry on the sundae for the company’s case.
Judge Torres is expected to make her decision on the lawsuit any time now, but it can extend to two months. That said, if the judge executes the summary judgment, the court ruling will have a serious influence on determining which cryptocurrencies should be classed as securities under U.S. federal securities laws.