Ripple scored another major victory on Friday as U.S. District Court Judge Analisa Torres denied the SEC's motion to strike Ripple's fair notice defense.
As Zy Cryptocurrency reported, the SEC filed a motion last April to strike down Ripple's "make-or-break" fair notice defense, which was designed to allow the court to force the SEC to use some information through a discovery order and prove that the agency "provided Ripple with fair notice that its issuance of XRP would be prohibited under the securities laws since 2013.
Ripple's request, if approved, would attempt to prove that the SEC was ignorant of the regulatory taint it claimed last April.
In response, the SEC urged the court to deny Ripple's motion at the pleadings stage because it was "a legally insufficient defense and Ripple cannot prevail as a matter of law. The agency also wrote to the court, attaching a number of stipulations to strengthen its case motion.
As a result, the court ruled Friday that the SEC failed to cite case law at the pleading stage to foreclose on the issue of Ripple's affirmative defense of fair notice. Moreover, the agency failed to show that because Ripple continued to pursue its fair notice defense, "it would suffer undue prejudice."
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In this case, the Court was also convinced that the SEC's mandate was to apply a delay strategy by adding time, expense and complexity before pushing the matter to a full trial, and decided to deny the SEC's motion.
"At this early stage of the case, the Court should not conclude that Ripple's defenses are invalid. Accordingly, the SEC's motion to strike Ripple's fair notice affirmative defense is denied." Read the order.
That said, given that the court also denied a dual motion to dismiss a lawsuit filed last April against Ripple CEO Brad Garlinghouse and co-founder Chris Larson for personal infliction of damages, all that remains is a full hearing. Defendants.
"Today's order makes clear that there is a serious question as to whether the SEC ever provided Ripple with fair notice that its XRP distributions since 2013 would be forever prohibited by the securities laws."
Stuart Alderoty, Ripple's general counsel, commented after the order.
The Ripple case, filed by the SEC in December 2020, has been a thorn in the side of XRP holders, who remain optimistic that the parties will settle without a full trial, or better yet, take the least amount of time to go to trial.