In a recent court filing, Ripple stated that their fair notice position against the Securities and Exchange Commission (SEC) is strengthened by the recent Supreme Court decision in Bittner v. United States.
The SEC has complained against Ripple Labs, its CEO Brad Garlinghouse, and its executive chairman Chris Larsen, saying that the company’s XRP tokens were unregistered securities. In the filing, Ripple Labs argued that the Bittner verdict supports their claim that the SEC failed to provide clear guidance on complying with securities laws about digital assets. The Bittner verdict overturned a Fifth Circuit ruling and highlighted the Due Process Clause’s requirement for fair notice.
According to Bittner, the Supreme Court held that “a reasonable notice should be given to the world in terms that the common world will comprehend, of what the law plans to do if a certain boundary is passed.”
The company said that the SEC’s failure to provide clear guidelines for the sector regarding how securities rules should be applied to digital assets resulted in market participants’ misunderstanding and reluctance. Ripple argued that there is no discussion of digital assets in the statutory provisions that are pertinent to their case, such as the definition of “security” in 15 U.S.C. 77b. Additionally, they claimed that the SEC’s earlier instructions on the subject appeared to conflict with their current legal stance.
Many seasoned securities law experts and industry players, according to the business, were unable to foresee the SEC’s present view. According to Ripple Labs, the SEC’s current premise has a severe fair-notice issue, just like in Bittner.
The case is currently pending, and the court’s decision will significantly affect the digital asset market and how securities rules are applied to digital assets.
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