Motions rejected for both SEC and Ripple as battle continues

Judge Analisa Torres of New York’s Southern District Court on Friday issued two rulings on motions filed in the Security and Exchange Commission (SEC) lawsuit against Ripple Labs.

Ripple argued that the agency had not been given fair notice that it would consider the token a security, denying the company a fair trial. Judge Torres refused the SEC motion, filed in April, to dismiss this defense, thereby affirming that the defense is viable in the lawsuit — in other words, that the defense, if accepted, could be used to win the case.

The judge too refused a motion filed by Ripple CEO Brad Garlington and Executive Chairman Chris Larsen in April to drop the case against them for complicity in the alleged unregistered sale of securities. By filing the motion, the defendants argued that even if the allegations in the lawsuit were true, they would not constitute a winnable case.

While Garlington praised dismissing the SEC’s move as a “huge win” on Saturday, the case is still in the plea phase, so many more legal maneuvers are likely to follow. Since Friday’s decisions, Ripple has issued a supplemental report refuting an expert report on XRP’s market performance.

The suit alleged that Ripple sold its XRP token as an investment product without SEC registration from 2013 to December 2020, when the agency filed a lawsuit. Ripple has argued that XRP is “a digital asset for real-time global payments” and is not subject to SEC jurisdiction

Related: SEC v. Ripple: Here’s How Two 2012 Memos Could Turn the Tide in the Milestone Crypto Case

The case is notable in that it is thus far a rare instance of an SEC filing going to court, rather than being settled out of court. The outcome of the case, if no settlement is reached, could set a precedent that would affect cases against crypto companies for the foreseeable future, and could encourage more companies to take the regulator to court.

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