Ripple secured yet another significant victory on Friday when Judge Analisa Torres, a United States District Judge, denied the SEC's motion to dismiss Ripple's fair notice defense.
According to ZyCrypto, the SEC filed a motion last April to dismiss Ripple's make-or-break fair notice defense, which sought to compel the SEC to provide some information via a discovery order and prove that the agency 'provided Ripple with fair notice that its distributions of XRP – since 2013 – would be prohibited under the securities law.'
If approved, Ripple's request would seek to demonstrate that the SEC was aware of what it now claims to be a regulatory smudge last April.
In response, the SEC requested that the court dismiss Ripple's motion during the pleadings stage because it is a "legally insufficient defense on which Ripple cannot prevail as a matter of law." In order to strengthen its case motion, the agency also wrote to the court and attached some regulations.
As a result, the court determined on Friday that the SEC had failed to persuade it to strike out Ripple's fair notice of affirmative defense by failing to cite case law where that had been done at the pleadings stage. Furthermore, the agency failed to demonstrate that the continuation of Ripple's fair notice defense would cause "undue prejudice."
In that case, the court was also convinced that the SEC was on a mission to use delay tactics by increasing the time, expense, and complexity before the case could proceed to full trial, which led to the decision to deny the SEC's motion.
"At this early stage in the case, the Court shall not conclude that Ripple's defense is invalid." As a result, the SEC's motion to strike Ripple's affirmative fair notice defense is DENIED." The order was read.
However, the matter will now proceed to a full hearing because the court denied a twin motion filed last April to dismiss the lawsuit by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, dealing a blow to the individual defendants.
Today’s order makes it clear there’s a serious question whether the SEC ever provided Ripple with fair notice that its distributions of XRP – since 2013 – would ever be prohibited under the securities law
Following the order, Ripple's general counsel, Stuart Alderoty, made a statement.
The Ripple case, which was brought by the United States Securities and Exchange Commission in December 2020, has been a thorn in the side of XRP holders, who remain hopeful that the two sides will reach an agreement without going to full trial, or, better yet, that the trial will take the shortest amount of time possible.
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