In a letter to Federal Judge Analisa Torres, Ripple Labs responded to the SEC’s motion to strike. This is a recommendation to attack fair notice defenses.
Ripple moves to prevent SEC from striking its defenses
The following content:
“The SEC’s anticipated motion to strike is meritless. The striking of affirmative defenses is disfavored in this Circuit and the SEC cannot remotely meet the high burden of showing that there is no question of fact or law that might allow the defense to succeed.”
It is asking the court not to set a joint briefing schedule for CEO Brad Garlinghouse’s and co-founder Chris Larsen’s motions to dismiss the lawsuit and the SEC’s motion to strike them:
“Should the SEC proceed with filing this meritless motion to strike, Ripple respectfully requests that this Court set its default briefing schedule unlinked to the individual defendants’ motions to dismiss – as one has no bearing on the other.”
The SEC has stated that Ripple’s protections are legally inappropriate as it has no obligation to warn exchanges of corporate violations while it is still under investigation.
However, according to Ripple’s lawyers, the agency’s previous statements and enforcement actions have indicated that XRP is not a security:
“Market participants reasonably understood, based on the statutory language, case law, prior actions by other regulators, and enforcement actions and public statements by the SEC and SEC officials that XRP was not a security and, for years, the SEC provided no contrary indication as the XRP market flourished.”
Ripple once again emphasizes that the Financial Criminal Enforcement Network has declared XRP a virtual currency even though the SEC points out that the 2015 agreement with FinCEN does not exempt the company from complying with privacy laws.
“This lack of fair notice was compounded by the 2015 settlement between Ripple and FinCEN and U.S. Department of Justice – declaring XRP to be a “convertible virtual currency,” a classification fundamentally incompatible with XRP being a security.”
Judge denies XRP holders’ bid to intervene in SEC v. Ripple lawsuit
According to a court filing this week, the request submitted by XRP holders to intervene as third-party defendants in the SEC’s lawsuit against Ripple Labs has been denied by U.S. District Judge Analisa Torres.
The motion was denied because the XRP holders did not file a pre-motion letter — a letter to the judge from the attorney explaining the rationale for the intended application — which is required before any motion can be filed. The judge’s decision does not preclude XRP holders from refiling their motion.
John Deaton, the attorney who had filed the motion on behalf of XRP holders, took to Twitter to reassure the XRP community:
What Did I say about being knocked down and how we respond?
It was denied “without prejudice” with the ability to refile in accordance with Judge Torres’ local rules. This simply means it must be refiled as a letter motion. I’m on it, please don’t get discouraged. https://t.co/R54YTBn5SW
— John E Deaton (@JohnEDeaton1) March 16, 2021
The document filed in the U.S. District Court for the Southern District states that Deaton’s motion to intervene was denied without prejudice to renewal in a motion that complies with Rule III(A) of the Court’s Individual Practices in Civil Cases.