The lawsuit between the United States Securities and Exchange Commission [SEC] and Ripple turned in Ripple’s favor on 6 April. The San Francisco-based company was granted access to the SEC’s documents and discussions about Bitcoin and Ethereum, both of which have been classified by the agency as digital assets and not securities.
“Today was a good day.”
The latest ruling by U.S. Magistrate Judge Sarah Netburn could also be looked upon as a major legal development for Ripple as it is trying to strengthen its “fair notice” defense in the ongoing lawsuit over the alleged sale of XRP in an unregistered securities offering. The SEC alleges that transactions with XRP constitute “investment contracts” and thus, securities subject to registration as per Section 5 of the Securities Act of 1993.
According to Attorney Jeremy Hogan who reviewed the hearing in a video, Ripple has moved to take a defensive position against the SEC’s claims, with Hogan adding that Ripple “lacked fair notice that its conduct was prohibited.”
“Ripple answered the SEC lawsuit with seven affirmative defenses and the most important one was Ripple’s 4th affirmative defense which is a Fair Notice claim which stems from the US Constitution and is a complete defense to a securities violations.”
The provisions of the documents that led to the classification of Bitcoin and Ethereum as digital assets could be an opportunity for Ripple to prove that XRP is also a digital asset, and not a security.
Meanwhile, reading the judges in the room, Hogan explained the favorable stance that could be taken by Judge Netburn. With some speculation, Hogan said,
“Judge Netburn is NOT going to Order the SEC to spend hundreds of hours going over tens of thousands of documents relevant only to Ripple’s Fair Notice defense if she knows that the entire defense is going to be thrown out next month.”
“It’s THAT hearing and THAT defense that are crucial to Ripple and this is the first evidence we have that the Judge is NOT going to throw it out.”
Given the drama inside and outside the courtroom, the next hearing could be crucial since it would highlight the judge’s position with respect to the lawsuit and crypto.
As Ripple prepares its crucial defense, the XRP and Ripple community has been celebrating this small victory. In fact, some like lawyer Jesse Hynes think that this “offers hope” for Ripple and “what they’ll find.”