In a legal battle with the U.S. Securities and Exchange Commission (SEC), Ripple Labs has filed a Letter of Supplemental Authority to strengthen its fair notice defense.
Ripple’s legal team referred to Judge Michael Wiles’ ruling in the Voyager bankruptcy case, which legal experts had already suspected. Judge Wiles strongly rejected the SEC’s claim, providing Ripple with further support for its fair notice defense.
The SEC had objected to Binance.US’s acquisition of Voyager, claiming that the Voyager token (VGX) had “aspects of a security,” but without specifying what those aspects were.
The SEC also argued that Binance.US was an unregistered securities exchange without explaining its position.
Judge Wiles dismissed the SEC’s objections and approved the bankruptcy plan, which aligns with Ripple’s arguments.
In its Letter of Supplemental Authority, Ripple pointed out that Judge Wiles’ ruling charges that the SEC’s objections were too vaguely worded. Moreover, the agency did not provide any evidence to demonstrate what debtors should prove to show that VGX is not a security.
Furthermore, Ripple argued that, according to Judge Wiles, the SEC provided only “limited guidance” to market participants. However, Judge Wiles also agrees with Ripple’s view that cryptocurrency market participants operate in a highly uncertain regulatory environment.
Ripple quoted a passage from the ruling highlighting regulators’ disagreement about whether cryptocurrencies are commodities or securities to support this argument.
XRP community attorney John E. Deaton expects Judge Torres to issue a ruling in Ripple vs. the SEC by the end of April. However, based on Torres’ record, Deaton would be surprised if no decision is made within the next 30 days.
In conclusion, Ripple Labs has strengthened its fair notice defense with Judge Wiles’ ruling in the Voyager bankruptcy case. Ripple’s arguments align with Judge Wiles’ decision, which rejected the SEC’s objections and approved the bankruptcy plan.
The ruling highlights the SEC’s lack of guidance to market participants and the uncertainty that cryptocurrency market participants face due to a highly uncertain regulatory environment. One can hope things improve on that front in the years to come.
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