The Ripple legal team has filed a response to the Securities and Exchange Commission's (SEC) recent letter of supplemental authority in support of its motion for summary judgment in the ongoing case against the San Francisco-based blockchain company.
The SEC cited a District of Massachusetts court decision, SEC v. Commonwealth Equity Servs., LLC, in which the court found that the defendant had violated negligence-based provisions of the Investment Advisers Act of 1940 relating to disclosure failures. The court also rejected a due process affirmative defense based on a lack of fair notice.
In their response, Ripple argues that the Commonwealth case supports their position since it underscores the importance of fair notice in legal proceedings.
The SEC's letter contends that the precedent set by the Supreme Court case Howey and its progeny provided Ripple with sufficient fair notice to defeat their constitutional defense. However, Ripple's lawyers maintain that the SEC's reliance on Howey as a source of fair notice is insufficient in this case.
Ripple's legal team points out that the Commonwealth case rejected a fair notice defense on summary judgment, even when the SEC had been aware of the practices in question for over two decades and had not adopted rules addressing the specific conduct.This, they argue, strengthens their argument that the SEC has not provided adequate notice to Ripple Labs regarding their disclosure obligations.
As the legal battle between Ripple Labs and the SEC continues, the outcome of the case could have significant implications for the broader cryptocurrency market and the regulatory landscape for digital assets.
Tomiwabold Olajide
Gamza Khanzadaev
