Ripple scores major win as court allows fair notice defense on XRP

Rick Steves

In ruling against the SEC’s motion, Judge Analisa Torres also stated Ripple is entitled to a full opportunity to assert its fair notice defense and have it adjudicated before a plaintiff may impose liability. 

The court has ruled against the SEC on its motion to strike Ripple’s fair notice defense in a major win for Ripple.

The order signed by Magistrate Analisa Torres confirms that the defendants’ fourth affirmative defense is a viable path to win the SEC v. Ripple lawsuit.

Stuart Alderoty, Ripple’s General Counsel, commented: “Good to see the Judge rejecting the SEC’s attempt to prevent Ripple from pursuing its fair notice defense. It’s even more imperative that the sun sets on the SEC’s “regulation by enforcement” approach.

“Today’s order makes it clear there’s a serious question whether the SEC ever provided Ripple with fair notice that its distributions of XRP – since 2013 – would ever be prohibited under the securities law.”

Why did court accept Ripple’s fair notice defense

The Judge presiding the court analyzed both parties’ arguments and found the “plausibility standard of Twombly applies to determining the sufficiency of all pleadings, including the pleading of an affirmative defense”, adding that courts apply a generally lower plausibility threshold when evaluation motions to strike affirmative defenses.

In ruling against the SEC’s motion, Judge Analisa Torres also stated Ripple is entitled to a full opportunity to assert its fair notice defense and have it adjudicated before a plaintiff may impose liability.

Ripple’s fair notice defense pleads the firm lacked and the SEC failed to provide fair notice that its conduct was in violation of the law. The SEC moved to strike this defense because it claimed to be legally insufficient and would lead Ripple to seek “intrusive discovery”.

The “intrusive discovery” mentioned by the SEC may include many of the documents the agency claims to be privileged. The battle over DPP isn’t over just yet because the plaintiff moved a motion for the judge to reconsider her prior ruling.

Judge Sarah Netburn allowed some documents to be produced to Ripple, including notes and emails regarding ex-SEC William Hinman’s 2018 speech on Ether.

The SEC spent much of the time claiming the speech was his personal opinion, but the strategy backfired as the judge then considered the documents in preparation for the speech not to be protected by deliberative process privilege.

Magistrate Analisa Torres also denied Chris Larsen and Brad Garlinghouse’s motion to dismiss the SEC’s complaint against them. In her ruling, she dismissed the argument that XRP sales were “predominately foreign”.



Read this next

Digital Assets

GK8 now allows clients to control their digital assets as they would their fiat

“As the institutional market is increasingly turning to self custody, our policy engine empowers them to automate transactions, approvals, and even crucial workflows, while providing the highest degree of security, consistency, governance and control.”

Digital Assets

Retail CBDCs in the UK: “Welcomed” by CryptoUK and R3, but “Dystopian” for ETC Group

“At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified”, said the BoE and HM Treasury.

Institutional FX

Centroid taps Iress API to provide retail brokers with real-time market data

“It has always been a challenge to have an efficient, elegant solution for market data and order execution for retail brokers, but with Iress we have found absolutely the right partner to add to our client offering.”

Digital Assets

Ramp launches FCA-approved off-ramp product, onboards Brave, Trust Wallet, Ledger

“To obtain and maintain our FCA registration, we must meet and operate within their strict anti-money laundering and counter-terrorist financing standards. This is a huge achievement for us, as compliance is a cornerstone of our business and what we stand for.”

Institutional FX

State Street launches FIX API for Fund Connect ETF platform

“Expanding from proprietary APIs to the FIX industry standard will bring us closer to our goal of 100% digital interactions. This is another example of innovations we’ve brought to our operating model as we celebrate 30 years of servicing ETFs since the launch of SPY.”

Industry News

HollyWally opens office in Portugal to bring B2B2C wallet-as-a-service platform to Europe

“We looked at a number of centers for startups throughout Europe and were attracted straight away to Lisbon. There is great Government support and enthusiasm for startups, it’s well positioned between our Asian and US offices, it’s a cost-effective city in which to base a fintech and it’s a beautiful place.”

Retail FX

Eightcap integrates Acuity’s economic calendar for trade ideas on MT4 or MT5

“By incorporating Acuity’s cutting-edge AI technology into our platform, we are able to offer our clients a powerful new tool that will help them stay ahead of the markets. We are committed to providing an extensive range of tools and educational resources that will enhance our clients’ trading experience and allow them to trade smarter.”

Digital Assets

Fuse Network powers Web3 economy, payments with ‘Fuse 2.0’

Web3 payments revolution startup Fuse Network announced the release of ‘Fuse 2.0.’ alongside a new roadmap, whitepaper, and fresh branding aimed at bringing crypto payments to the mainstream global economy.

Inside View

Private Equity Renaissance

Recent years have seen a resurgence in the concept of trading physical equities, with a slew of new arrivals joining the market for what is arguably one of the oldest forms of investing. But what has been the driving force behind this change in momentum?