Latest developments in Ripple case: SEC was wrong to rebuke two Commissioners’ views without clarity

SEC and Ripple Labs are clashing anew over Ripple’s defense that the SEC failed to provide fair notice that XRP transactions violated the law or that the SEC would later claim XRP to be a security.

This is a step forward for Ripple

US Securities and Exchange Commission (SEC) said their appointed leaders’ views do not reflect the agency’s stance on Ripple and XRP. They must be referring to the fact, as AZCoin News reported, that SEC Commissioners Hester Peirce and Elad Roisman agreed that the SEC’s ruling was flawed because it failed to specifically explain which projects touted by Coinschedule are actually securities. And Ripple’s legal team uses the Coinschedule penalty as a defense.

“This statement by two sitting SEC Commissioners makes even more clear that during the time relevant to this case, members of the public did not have fair notice of what the law requires,” wrote Ripple’s defense attorney Michael Kellogg, in a letter to U.S. District Judge Analisa Torres.

In response, the SEC says that its own commissioners’ views do not reflect the position of the agency and that what they say in public is not relevant to the SEC’s claims that Ripple, its CEO Brad Garlinghouse and chairman Chris Larsen violated the law.

“The Statement at issue is not a statement of the SEC itself or any sort of binding authority on this Court,” wrote SEC attorney Mark Sylvester in a letter to Judge Torres.

“The Statement cannot serve as the basis to hold that the Constitution bars the application of the securities laws’ registration requirements to Ripple’s conduct,” Sylvester wrote. “Nor can the Statement serve as the basis to dismiss the SEC’s claims that the Individual Defendants, with their own offers and sales and other conduct, aided and abetted Ripple’s unregistered offers and sales.”

The filing by Ripple and the reply by the SEC amount to a lot of huffing and puffing but are very unlikely to weigh heavily in the Court’s consideration of the motion to strike.

Also recently, attorney James K. Filan, who closely follows the Ripple case and the SEC, updated the latest developments in the case.

“Individual Defendants respond to SEC’s letter regarding the public statement by Commissioners Peirce and Roisman, describing SEC response as going on to publicly rebuke these two Commissioners’ considered views that there is no clarity,” Filan tweeted.


Source: James K. Filan/Twitter

Given this situation, quite a few argue that if true, the question becomes which party is actively and deliberately dragging it out? Mutual? Ripple or SEC? If the commissioners are arguing about clarity, then there is an argument about clarity, meaning there is no clarity. Seems circular, but had to be said. This is not about invalidating a law, it precedes that. It is about whether or not the law even applies.

Attorney Jeremy Hogan also expressed his opinion on this:

“Although the statement by Commissioners Peirce and Roisman was a blessing for Ripple, it is even doubly so for the individual Defendants for which the SEC has to prove that they KNEW or RECKLESSLY disregarded Securities laws. Expect to see the Ripple reply shortly.”

The statement from the Commissioners doesn’t change his estimate for timeframes except he thinks it makes it more likely that the individual Defendants might win their motions to dismiss, he argues. And obviously, he thinks it puts Ripple in a better position as far as settlement negotiations.

At the present time, there are also many opinions that the community says much about how SEC is going that it views as irrelevant as evidence that two commissioners publicly state there is regulatory uncertainty in 2021 regardless of whether they are personal views. What is the Sec’s standard of proof against the individual defendants?

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