In a recent court filing, Ripple Labs, Inc. argued that the recent Supreme Court verdict in Bittner v. United States buttresses their fair notice defense against the Securities and Exchange Commission (SEC).
Ripple Labs, along with its CEO Brad Garlinghouse and Executive Chairman Chris Larsen, is currently facing a lawsuit filed by the SEC alleging that the company's XRP tokens were unregistered securities.
In the filing, Ripple Labs contended that the Bittner verdict, which reversed a Fifth Circuit decision and underscored the Due Process Clause's mandate for fair notice, corroborates their assertion that the SEC failed to provide unambiguous guidance on how to comply with securities laws regarding digital assets.
The Supreme Court opined in Bittner that "a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed."The company asserted that the SEC failed to come up with clear guidance for the industry pertaining to the application of securities laws to digital assets, causing confusion and ambivalence among market participants.
Ripple Labs pointed out that the statutory provisions relevant to their case, such as the definition of "security" in 15 U.S.C. § 77b, provide no discussion specific to digital assets. They also argued that the SEC's prior guidance on the matter appeared to contradict their present litigating position.
The company stated that many experienced securities law practitioners and industry participants were unable to anticipate the SEC's current theory. Ripple Labs argues that, like in Bittner, the SEC's current theory poses a serious fair-notice problem.
The case is still unfolding, and the Court's ruling will have momentous implications for the digital asset industry and the application of securities laws to digital assets.