As the legal battle between Ripple and the United States Securities and Exchange Commission (SEC) continues to attract the attention of the cryptocurrency community and beyond, the regulator has filed a new argument to support its summary judgment motion.
Specifically, the SEC has filed a letter of supplemental authority in further support of its pending Motion for Summary Judgment to Judge Analisa Torres, as shared by the pro-XRP U.S. defense lawyer and popular commentator on the case James K. Filan in a tweet posted on April 11.
In the letter, the SEC refers to the opinion issued by a District of Massachusetts court on April 7, in which it grants the financial watchdog’s motion for summary judgment and denies the cross-motion for summary judgment by the defendant, the brokerage firm Commonwealth Equity Services.
Basis for denying ‘fair notice’ argument
According to the agency, this opinion supports the SEC’s case against the blockchain company, as it refers to the alleged violation of federal securities laws, as well as including the ‘fair notice’ argument by the defendants in both cases, but which was denied by the court in the lawsuit against Commonwealth.
In the SEC’s view, the 50-year-old Supreme Court precedent was enough to be considered as a ‘fair notice’ in the case against Ripple, as it was regarded as the same by the Massachusetts court, which ruled in favor of the SEC.
“First, its holding that longstanding Supreme Court precedent can provide fair notice is identical to the SEC’s position in this case: that Howey and its progeny provided Defendants with sufficient fair notice to defeat their constitutional defense.”
In conclusion, the Massachusetts court’s decision offers “additional authority for rejecting Ripple’s fair notice defense and granting the SEC’s motion for summary judgment,” as the letter written by Benjamin J. Hanauer, the counsel for the SEC, reads.
Legal experts disagree
At the same time, lawyer Bill Morgan brushed off the newest letter by the SEC’s defense, arguing there were no similarities between the two cases and that there was no reason for concern. As he stressed in his tweet on April 12:
“If you think that there is fact similarity in selling an asset like XRP in a market which is 13 years old to buyers to whom it owed no post-sale obligations, & a case in which an investment adviser failed to make all necessary disclosure of potential conflicts of interest from which it benefitted to retail investor clients to whom it owed fiduciary duties and whose funds it managed, feel free to be anxious (…).”
Elsewhere, banking law expert Todd Phillips has brought to the attention an issue with the use of the Howey Test to determine what is or isn’t an investment contract, because it requires “a contract, post-sale legal obligations, and the right to share profit,” and that using this argument could lead the SEC to lose its “war against crypto,” as Finbold reported on April 10.
As things stand, the XRP token is currently changing hands at the price of $0.50, which demonstrates a drop of 3.12% in the last 24 hours but a 0.12% increase over the week, as the digital asset holds on to the gains of 35.53% achieved on its monthly chart.