Ripple’s legal team has submitted a response to the Securities and Exchange Commission’s (SEC) letter of additional authority supporting the blockchain company’s petition for summary judgment in the continuing lawsuit. In SEC v. Commonwealth Equity Servs., LLC, the SEC cited a District of Massachusetts court ruling in which the defendant violated negligence-based requirements of the Investment Advisers Act of 1940 about disclosure deficiencies. The court rejected a due process affirmative defense based on a lack of fair notice.
Ripple responds that the Commonwealth case supports their argument since it emphasizes the need of fair notice in judicial procedures. According to the SEC’s letter, the precedent established by the Supreme Court decision Howey and its progeny supplied Ripple with sufficient fair notice to defeat their constitutional claim. However, Ripple’s attorneys argue that the SEC’s reliance on Howey as a source of fair notice, in this case, is inadequate.
Ripple’s legal team notes out that the Commonwealth case rejected a fair notice defense on summary judgment, despite the fact that the SEC was aware of the activities at issue for more than two decades and had not implemented regulations addressing the precise behavior. This, they claim, enhances their case that the SEC failed to give Ripple Labs with appropriate notice of their disclosure requirements.
The continuing legal struggle between Ripple Labs and the SEC might have far-reaching consequences for the whole cryptocurrency market and the regulatory framework for digital assets. Ripple’s argument underlines the significance of clear and proper notice in judicial procedures, particularly when new and developing technologies are involved.
The outcome of the case may also have an influence on the regulatory environment for digital assets since a judgment in favor of the SEC may suggest a tighter regulatory stance in the market. A verdict in favor of Ripple, on the other hand, might give greater clarity and advice for cryptocurrency startups.
The cryptocurrency community will be monitoring the case intently as it progresses since the verdict might have far-reaching implications for the industry’s future. For the time being, both Ripple and the SEC will continue to make their respective cases, with the case’s fate still unknown.