152 Interactions, 2 today
Ripple and its executives were investigated by the Securities and Exchange Commission (SEC) in December for allegedly obtaining funds through the sale of unregistered securities. While the litigation has been fought hard since then, many believe Ripple has gained the upper hand in recent months, especially because the company has won a number of motions.
Individual defendants Brad Garlinghouse and Chris Larsen have utilised recent SEC Commissioners Hester Peirce and Elad Roisman observations to restate an old defence with their latest filing, According to the same,
“The Public Statement further supports the Individual Defendants’ motion to dismiss for failure to adequately plead that they allegedly aided and abetted Ripple’s offers or sales of unregistered securities.”
The regulators’ comments on “regulatory ambiguity” in the context of the SEC’s activities in the Coinschedule case were the subject of the aforementioned observations. Coinschedule was fined over $200,000 by the SEC, while its parent firm Blotics was fined nearly $200,000 for marketing initial coin offerings [ICOs], with the company collecting cash from token issuance as well.
In their public statement, SEC Commissioners Hester Peirce and Elad Roisman had observed that,
“The only certainty we see is that people have questions about how to comply with the applicable laws and regulations.”
The Commissioners also pointed out that the “huge number of considerations and lack of weighting cut against the clarity the guidance was meant to convey,” as well as the fact that applying regulations to a “totally different token offering” does not always result in obvious answers.
Finally, the duo mentioned the “decided lack of clarity” surrounding the application of securities law, as well as the “not crystal clear” Howey Test. Given the two SEC commissioners’ positions, it’s no wonder that there’s genuine optimism surrounding Ripple’s legal defence.
In reality, Ripple’s Fair Notice defence can be viewed in the context of the aforementioned letter. Judge Netburn had determined just a few months previously that the same was based on the SEC’s operations, not the defendants’ behaviour or knowledge, despite the agency’s assertion that such a defence “fails as a matter of law.” Furthermore, many believe that this defence cannot be overstated, with Jeremy Hogan stating,
“If the Fair Notice defense survives and Ripple wins, the SEC is going to have an uphill battle winning any other lawsuit they bring.”
On the back of the aforementioned development, the attorney was quick to observe that,
“This is the best piece of evidence we’ve seen on the Fair Notice Defense thus far and it would be Exhibit Numero Uno in my Motion for Summary Judgment. What a gift for Ripple and it was handed to them for free by two – dare I say brave- SEC people calling it how they see it.”