On Friday, Ripple clinched yet another significant win as Judge Analisa Torres, a United States District Judge rejected the SEC’s motion to strike out Ripple’s fair notice defense.
As ZyCrypto reported, the SEC filed a motion last April to strike out Ripple’s make-it-or-break-it fair notice defense which sought to have the court compel the SEC to avail some information through a discovery order and prove that the agency ‘provided Ripple with fair notice that its distributions of XRP – since 2013 – would be prohibited under the securities law.’
Ripple’s request, if approved, would seek to prove that the SEC had been privy to what now it claims to be a regulatory smudge last April.
In response, SEC had urged the court to strike Ripple’s motion at the pleadings stage because it is a “legally insufficient defence on which Ripple cannot prevail as a matter of law.” The agency had also written to the court attaching some regulations in a bid to strengthen its case motion.
Accordingly, the court found on Friday that the SEC had failed to persuade it on the matter of striking out Ripple’s fair notice of affirmative defense by failing to cite case laws where that had been done at the pleadings stage. Furthermore, the agency failed to show that “it will suffer undue prejudice” as a result of the continuation of Ripple’s fair notice defense.
In that event, the court was also convinced that the SEC was on a mission to apply delay tactics by increasing the time, expense, and complexity before the matter could move to full trial hence the decision to deny SEC’s motion.
“The Court shall not conclude, at this early stage of the case, that Ripple’s defense is invalid. Accordingly, the SEC’s motion to strike Ripple’s fair notice affirmative defense is DENIED.” The order read.
That said, what now remains is for the matter to proceed to a full hearing given that the court has also denied a twin motion filed last April to dismiss the lawsuit by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen dealing a blow to the individual defendants.
“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”
Ripple’s general counsel, Stuart Alderoty commented following the order.
The Ripple case which was brought by the U.S. Securities and Exchange Commission in December 2020 has been a thorn in the foot for XRP holders who remain optimistic that the two sides will reach a settlement without going to full trial, or better yet, have the trial take the least time.