- The blockchain firm says it did not receive a fair warning from the regulator about its alleged security offering.
- It is the latest development in the case, which has been termed a ‘war’ by Ripple supporters.
Enjoy your financial freedom with Uphold
Get a welcome bonus of $50 when you sign up and trade at least $600 of your favorite asset
Ripple Labs, Bradley Garlinghouse, and Christian Larsen – the defendants in the lawsuit by the US Securities and Exchange Commission (SEC) against the blockchain – have applied to the presiding judge to rule the case in their favor based on ‘Fair Notice Defense.’
Citing a just concluded case, Bittner v. United States, where the presiding judge ruled that ‘‘ a fair warning should be given to the world in a language that the common world will understand, of what the law intends to do if a certain line is passed,’’ Ripple argues that the regulator did not give them any such notice.
As a recap, the SEC is suing Ripple for raising $1.3 billion by selling its cryptocurrency XRP without first registering it as a security. The landmark case, which many crypto experts say could have far-reaching consequences in the sector, is part of a wider agenda by the top US financial cop to have everything it deems to be a security under its purview. And that could be all non-bitcoin cryptos, according to the latest comments by chairperson Gary Gensler.
More twists and turns
Besides not granting the defendants fair notice, the submission adds that the commission has been frustrating their efforts to file a fair notice defense motion. It was after several attempts that the United States District Court Southern District of New York, where Judge Analisa Torres is presiding over the matter, that Ripple was granted an opportunity to explain the fair notice defense.
Meanwhile, notable figures in the industry are drumming up support for Ripple and its current and former executives, faulting the SEC for running a crypto-wide crackdown that risks stifling innovation. The attorney representing XRP holders, John Deaton, has termed the case a ‘war’ questioning its logic.
In a tweet, Deaton said: ‘‘The point is that the crypto industry must accept that the SEC is waging war against crypto when it attacked not only how promoter sells a token but attacked the token itself – calling software code a security per se – no matter the seller or the circumstances surrounding the sale.’’
His sentiments were echoed by Garlinghouse, who is of the view that the case is beyond Ripple and affects the entire sector, considering similar cases brought by the regulator against other players. The date for the conclusion of the matter is uncertain, although some believe it could come before the end of March.
Start buying crypto in 3 simple steps
Buy, sell, and trade 250+ cryptos with low fees