After the United States Securities and Exchange Commission (SEC) filed a new argument to support its summary judgment motion in the widely publicized and prolonged lawsuit against Ripple, the blockchain company’s legal team refused to stay silent and filed its own argument contradicting the SEC’s reasoning.
Specifically, Ripple’s lawyer Michael K. Kellogg wrote a response arguing that the proceedings from the Commonwealth case to which the regulator was referring in the argument were irrelevant to Ripple and the XRP token, as shared by a defense lawyer and popular commentator on the case, James K. Filan, in a tweet on April 13.
As a reminder, the SEC’s legal team earlier filed a letter of supplemental authority in further support of its summary judgment motion, in which it referred to a District of Massachusetts court’s decision denying the defendants ‘fair notice’ argument and siding with the financial watchdog in a securities fraud case, as Finbold reported on April 12.
Irrelevant to Ripple and XRP
However, Kellogg argued that the decision, which he referred to as “an out-of-circuit, unpublished district court opinion,” was irrelevant to the current case, as Ripple had “abundant evidence (…) showing that reasonable market participants, trying to understand what the SEC would permit or prohibit, concluded that Defendants’ offers and sales of XRP were not ‘investment contracts,’ and told the SEC so.”
“There is also abundant evidence that the SEC was not only aware of the widespread regulatory confusion but helped to sow it by repeatedly offering (and then disclaiming) vague guidance that differed from the Howey test,” he added.
By comparison, in the Commonwealth case, “the defendant adduced no contemporaneous evidence supporting its defense that market participants lacked fair notice of an obligation to disclose economic conflicts of interest (…). It merely quoted SEC guidance and presented a paid expert who opined that he believes (in retrospect) that the guidance did not require certain disclosures. (…) The ‘clear directive’ from Commonwealth is absent here.”
Finally, Ripple’s counsel took a jab at the regulator’s brag of other court decisions throwing out the defendants’ ‘fair notice’ arguments, stressing again that they had nothing to do with the case against Ripple:
“The SEC’s boast of the ‘unbroken chain of district court decisions rejecting fair notice defenses, on summary judgment, in SEC enforcement actions’ is irrelevant. (…) The Court has already rejected the SEC’s reliance on these cases.”
Indeed, Kellogg’s opinion is shared by other legal connoisseurs, including lawyer Bill Morgan, who pointed out there were no similarities between the two cases, while banking law expert Todd Phillips singled out the use of the Howey Test as problematic in determining what is or isn’t an investment contract.
Meanwhile, the XRP community, in general, seems to be optimistic about the outcome of the case, as the price of the digital asset has increased by 3.96% in the last 24 hours, in addition to gaining 4.99% during the previous week, and 40.97% on its monthly chart, according to the data retrieved on April 14.