Ripple vs SEC Update– The Security and Exchange Commission has supported its pending summary judgment motion against Ripple with a new supplemental authority letter.
The case between Ripple and the SEC has been going on for a while with new updates coming in daily. As reported in our previous post, John Deaton predicted that a ruling for the case might come before May 6.
In the meantime, the new supplemental letter was filed yesterday. The SEC pointed to its previous case against Commonwealth Equity Services in the letter. According to the security regulators, the Commonwealth Court decreed that the defendant failed to reveal inevitable “conflicts of interest.” This is a clear violation of the negligence-based obligation of the Investment Advisers Act of 1940.
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Also, in the letter, the refusal of The District of Massachusetts court to Ripple and other defendants’ cross-motions while approving the SEC’s request for summary judgment was addressed.
A part of the letter read:
“The Commonwealth court held that, unlike in Upton, its defendant received fair notice by virtue of 50-year old Supreme Court precedent regarding Advisers Act disclosure obligations.”
The SEC brought up the comparison between Ripple and Commonwealth because the latter also maintained that it was insufficient to support the discovery with a 50-year-old Supreme Court rule on disclosure requirements. Nevertheless, the court declared in favor of the exchange commission claiming that it provided fair notice. The SEC supplemental letter comes a month after Ripple sent theirs in support of its fair notice defense in the case.
Attorney Bill Morgan’s Reaction
After the SEC sent in their letter, Australian attorney Bill Morgan reacted, denying any comparison. He said,
“If you happen to suppose that there’s reality similarity in promoting an asset like XRP in a market which is 13 years outdated to patrons to whom it owed no put up sale obligations, & a case during which a funding adviser didn’t make all mandatory disclosure of potential conflicts of curiosity from which it benefitted to retail investor purchasers to whom it owed fiduciary duties and whose funds it managed, be at liberty to be troubled concerning the SEC bringing this case to Decide Torres’ consideration.”
Ripple’s Previous Supplemental Letter
About a month ago, Ripple submitted a letter supporting its fair notice defense in the Ripple vs SEC case. In the letter, Ripple cited the absence of clear rules in the United States crypto market.
The company pointed out a recent Supreme Court judgment in the Bittner vs. US case. In the ruling, two Justices depended on the “rule of lenity” to give a verdict. In case of unfamiliarity, the rule of lenity requires that “when a law is unclear or ambiguous, a court must apply the law in the manner that is most favorable to the defendant.”
The SEC further stated that the rule of lenity applies only to criminal cases and not civil ones like in this case. Furthermore, the exchange commission added that the rule does not “absolve the blockchain company of liability.”