In a legal battle with the US Securities and Exchange Commission (SEC), Ripple Labs yesterday filed a Letter of Supplemental Authority to add a fair notice defense. As legal experts have suspected, Bitcoinist reported, the letter refers to the decision of Judge Michael Wiles in the Voyager bankruptcy case. In it, Judge Wiles rejected the SEC’s claim in very strong terms.
Another Argument For Ripple
As Ripple’s legal team noted in its letter to Judge Torres, his colleague from the same circuit, Judge Wiles, issued a decision on March 11, 2023, further supporting Ripple’s notice defense.
The SEC objected to Binance.US’ plan to acquire Voyager on the grounds that the Voyager token (VGX) had “security aspects,” without specifying what those aspects were. The SEC also argued that Binance.US is an unregistered securities exchange, without explaining why the SEC took that view.
Judge Wiles rejected the SEC’s objections and approved the bankruptcy plan. The rationale for the decision is consistent with many of Ripple’s arguments, according to the Letter of Supplemental Authority.
First, the statement said that the SEC’s objections were vaguely worded and noted that the agency did not provide any evidence that the borrowers would have to prove to show that VGX was not a security. In addition, Ripple argued to Judge Torres that, according to Judge Wiles, the SEC generally provides only “limited guidance” to market participants.
Second, Judge Wiles agreed with Ripple’s argument that cryptocurrency market participants “operate in a regulatory environment that can be described as uncertain at best.” To back this up, Ripple quotes the following passage from the ruling:
Regulators themselves cannot agree that cryptocurrencies are commodities that can be regulated by the CFTC, or whether securities are subject to securities laws, or not, or even what criteria should be applied to make that decision.
Indefinite [that] has remained despite the fact that cryptocurrency exchanges have been around for years.
Decision At the End of April at the Latest?
In a recent interview, XRP community lawyer John E. Deaton stated that he expects Judge Torres to issue a ruling on Ripple vs SEC no later than the end of April. As his attorney explained, that assumption was based on Torres’ record.
“There were times when they did summary judgment at the same time as the Daubert motion. […] Then there was another case where they did a Daubert decision and two weeks ago and they gave a decision on summary judgment. And then there were cases where they did Daubert rulings and 60 were in between,” Deaton said.
Based on that, lawyers will be surprised if there is no decision in the next 30 days. “If the end of April comes and we are still waiting, […] would be inconsistent with the way he handled cases in the past.
At press time, the price of XRP is at $0.3808, continuing the downward trend that started in early November 2022.
Featured image from Gavel/Unsplash, chart from TradingView.com