On April 6, the case between the United States Securities and Exchange Commission [SEC] and Ripple was resolved in Ripple’s favour. The San Francisco-based firm was given access to the SEC’s records and meetings about Bitcoin and Ethereum, all of which the regulator has listed as crypto currencies rather than shares.
“Today was a good day.”
The recent decision by U.S. Magistrate Judge Sarah Netburn may also be seen as a significant legal advance for Ripple, which is attempting to reinforce its “fair notice” protection in the pending litigation over the fraudulent selling of XRP in an unregistered securities offering. The SEC claims that XRP trades are “investment contracts,” and hence shares that must be registered under Section 5 of the Securities Act of 1933.
According to Attorney Jeremy Hogan who reviewed the hearing in a video, Ripple has moved to take a defensive position against the SEC’s claims, with Hogan adding that Ripple “lacked fair notice that its conduct was prohibited.”
“Ripple answered the SEC lawsuit with seven affirmative defenses and the most important one was Ripple’s 4th affirmative defense which is a Fair Notice claim which stems from the US Constitution and is a complete defense to a securities violations.”
The terms of the documents that lead to the recognition of Bitcoin and Ethereum as digital assets may provide an incentive for Ripple to demonstrate that XRP, too, is a digital asset and not a defence.
Meanwhile, reading the judges in the room, Hogan clarified the favourable position that Judge Netburn would take. Hogan said, “With some conjecture,”
“Judge Netburn is NOT going to Order the SEC to spend hundreds of hours going over tens of thousands of documents relevant only to Ripple’s Fair Notice defense if she knows that the entire defense is going to be thrown out next month.”
“It’s THAT hearing and THAT defense that are crucial to Ripple and this is the first evidence we have that the Judge is NOT going to throw it out.”
With the chaos both within and outside the courthouse, the next hearing will be critical because it would highlight the judge’s stance on the case and cryptocurrency.
The XRP and Ripple communities have been celebrating this minor win as Ripple prepares for its critical battle. Indeed, others, such as lawyer Jesse Hynes, believe that this “offers hope” for Ripple and “what they’ll discover.”
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