The US Securities and Exchange Commission (SEC) has taken a surprise attack on Ripple’s case by submitting a supplemental letter of authorization to strike at Ripple’s “fair notice” defense. Meanwhile, the XRP token is down 2.33% in the past 24 hours to $0.7 after the market’s bearishness.
Surprise move the Securities and Exchange Commission
With the famous SEC vs. Ripple case expected to be resolved in April of this year, the Securities and Exchange Commission took a new step that left many wondering if previous expectations could change.
The US regulator uses a winning move from another case to hit Ripple’s main arguments.
The Securities and Exchange Commission took John M. Fife and five entities it controls to court in September 2020 for selling them $21 billion in cash stock and earning $61 billion in profit without registering as security dealers.
The FIFE defense adopted an argument similar to that of Ripple, claiming that the Securities and Exchange Commission did not give them a fair warning and that the term “dealer” could be interpreted broadly. Last month, the court denied that argument.
What does that mean for the Ripple case?
Naturally, the regulator is now aiming to use this refusal to hit Ripple’s “fair notice” key defense.
Similarly, Ripple’s “fair notice” defense alleges that the regulator failed to notify it about a potential violation of federal securities laws and alleges that the SEC misused the term “investment contract,” adding that “the SEC theory is that XRP is an investment.” Contract, wrong about facts, law, and shares.”
No foreign regulator has decided that XRP is a security. In fact, quite the opposite is true. The United States will be the unfortunate outsider.
The Securities and Exchange Commission uses the latest finding of the FIFE case to insist that the term “investment contract” has been bound by legal standards since 1946:
In the case of Ripple, there has been a binding authority interpreting the term “investment contract” since 1946. WJ Howey Co., 328 US at 298-99. So, five Provides additional power to hit Ripple’s 4th Positive Defense.
However, the cases have distinct terminology. Lawyer Jeremy Hogan to explain Via Twitter that the outcome of the FIFE case “The SEC’s position is marginally aided in its movement to defend fair notice of the Ripple strike, so the SEC took it to court.”
Although the Securities and Exchange Commission is trying to make out the similarities in both cases, Hogan claims that FIFE “was at a very different stage in the litigation and that the standard is very different from the SEC v. Ripple case.
In Fife, the defendant attempted to push “fair notice” in order to dismiss the suit entirely (and failed) because the burden was too heavy for the party going to strike to plead. In the case of Ripple, it is the SEC that attempts the positive defense of fair notice and has a heavy burden to meet.
Ripple CEO Brad Garlehouse remains optimistic towards the end of 2021 as he expressed to CNBC:
Obviously we see good questions asked by the judge. And I think the judge recognizes that it’s not just about Ripple, that will have broader implications.
Related reading | XRP Builds Momentum Up 7% With Ripple Launching New ODL Partnership
Impact on XRP
Related reading | Ripple Has Strongest Year Ever Despite “Sec Attack on Cryptocurrency”
The next session will be an important day for the outcome of the Ripple case, and hence the price of XRP.
The timing is somewhat complicated for XRP. Its downtrend appears to be following the movement of the general crypto market. XRP fell by 2.33% in the last 24 hours to reach $0.7634 as seen in the following chart:
After the Securities and Exchange Commission filed a lawsuit against Ripple in December 2002, the price of XRP dropped dramatically from $0.60 to $0.1748. It kept dropping and losing ground but it remained within the top 10 cryptocurrency rankings.
After that, XRP recovered throughout 2021 and reached $1.34 on November 10, 2021, although it was unable to close the year above $1.01.
XRP enthusiasts expect Ripple to win the case and XRP enters a massive rally, rising to an all-time high of $3.4 or even double digits. However, previous forecasts did not take into account the current downtrend of the crypto market.
And if the Ripple case has a surprisingly negative accuracy, XRP could see a very sad outcome.