In its legal battle with the U.S. Securities and Exchange Commission (SEC), Ripple Labs yesterday filed a Letter of Supplemental Authority to further bolster its fair notice defense. As legal experts had already suspected, Bitcoinist reported, the letter refers to Judge Michael Wiles’ ruling in the Voyager bankruptcy case. In it, Judge Wiles rejected the SEC’s claim in surprisingly strong terms.
Another Argument In Favor Of Ripple
As Ripple’s legal team noted in its letter to Judge Torres, her colleague from the same circuit, Judge Wiles, issued a decision on March 11, 2023, further supporting Ripple’s fair notice defense.
The SEC objected to Binance.US’s plan to acquire Voyager on the grounds that the Voyager token (VGX) had “aspects of a security,” without specifying what those aspects were. The SEC also objected that Binance.US was an unregistered securities exchange, without explaining why the SEC took that view.
Judge Wiles rejected the SEC’s objections and approved the bankruptcy plan. His ruling rationale is consistent with many of Ripple’s arguments, according to the Letter of Supplemental Authority.
First, the ruling charges that the SEC’s objections were too vaguely worded and notes that the agency did not provide any evidence of what the debtors should prove to show that VGX is not a security. In addition, Ripple argues to Judge Torres that, according to Judge Wiles, the SEC generally provided only “limited guidance” to market participants.
Second, Judge Wiles agrees with Ripple’s arguments that cryptocurrency market participants “operate in a regulatory environment that can be described as highly uncertain at best.” To back this up, Ripple quotes the following passage from the ruling:
Regulators themselves cannot seem to agree as to whether cryptocurrencies are commodities that may be subject to regulation by the CFTC, or whether they are securities that are subject to securities laws, or neither, or even on what criteria should be applied in making the decision.
An uncertainty [that] has persisted despite the fact that cryptocurrency exchanges have been around for a number of years.
Decision By The End Of April At The Latest?
In a recent interview, XRP community attorney John E. Deaton stated that he expects Judge Torres to issue a ruling in Ripple vs. the SEC no later than the end of April. As the attorney explained, his assumption is based on Torres’ record.
“There have been times where she did the summary judgment ruling at the same time as the Daubert motions. […] Then there was another case where she did the Daubert ruling and two weeks went by and she gave the decision on summary judgment. And then there was a case where she did the Daubert ruling and 60 were between,” Deaton stated.
Based on that, the lawyer would be surprised if no decision is made within the next 30 days. “If late April comes and we are still waiting, […] it would be inconsistent with the way she handled cases in the past.”
At press time, the XRP price was at $0.3808, continuing its sideways trend that began in early November 2022.
Featured image from Gavel / Unsplash, chart from TradingView.com