Ripple has responded to the ongoing legal dispute with the United States Securities and Exchange Commission (SEC) by countering the SEC’s argument regarding its fair notice defense strategy. According to a document filed on April 13, Ripple asserted that the case cited by the SEC did not provide any grounds to dismiss the fair notice defense. The blockchain company also substantiated its claims that the securities regulator failed to give adequate notice concerning its disclosure obligations.
The SEC’s Letter of Supplementary Authority
The SEC filed a letter of supplementary authority on April 19, supporting its motion for summary judgment, citing a District of Massachusetts court opinion concerning a case against Commonwealth Equity Services LLC – SEC vs. Commonwealth. In the ruling, the defendant violated the Investment Advisers Act of 1940 and failed to provide adequate notice of disclosure requirements, and the court rejected the fair notice defense. The financial regulator argued that in its case with Ripple, the Howey Test provided sufficient fair notice to beat the defendant’s defense.
Ripple responded, stating that the defendant in the Commonwealth case had provided insufficient evidence on the fair notice defense, as they had merely cited SEC guidance and presented a paid expert witness. However, in its case, Ripple maintained that there was abundant evidence, including the SEC’s files and communication with third parties, concluding that the offer and sale of XRP tokens were not investment contracts.
Ripple also stated that the SEC’s boast of an unbroken chain of district court decisions rejecting fair notice defenses was irrelevant, as none of the previous cases were related to XRP or the facts presented in Ripple’s case, further emphasizing its fair notice defense.