The SEC Files A Strike Against Ripple’s Defense. Could It Drown XRP?
January 07 2022 - 6:59PM
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The U.S. Securities and Exchange Commission (SEC) made a surprise
attack on the Ripple case by filing a letter of supplemental
authority to strike Ripple’s “fair notice” defense. Simultaneously,
the token XRP is down 2.33% in the last 24 hours to $0.7 following
the market’s downtrend. The SEC’s Surprise Move As the popular SEC
vs. Ripple case is expected to be resolved around April this year,
the SEC has made a new move that left many wondering if previous
expectations could change. The American regulator is using a
winning move from another case to strike at Ripple’s key arguments.
The SEC had taken John M Fife and five entities controlled by him
to court in September 2020 for selling $21 billion of penny stocks
and gaining a profit of $61 billion without registering as security
dealers. FIFE’s defense adopted an argument similar to Ripple’s,
alleging the SEC hadn’t given them a fair warning and the term
“dealer” can be widely interpreted. Last month, the court denied
this argument. What Does It Mean For The Ripple Case? Naturally,
the regulator now aimed to use this denial to strike at Ripple’s
“fair notice” key defense. Similarly, Ripple’s “fair notice”
defense alleges the regulator failed to notify them about a
possible violation of federal securities laws and claimed the term
“investment contract” is being misused by the SEC, adding that “The
SEC’s theory, that XRP is an investment contract, is wrong on the
facts, the law and the equities.” No foreign regulator has
determined that XRP is a security. In fact just the opposite is
true. The U.S. would be the unfortunate outlier. The SEC is using
the FIFE case latest outcome to insist that the term “investment
contract” is bound by legal parameters since 1946: In Ripple’s
case, binding authority construing the term “investment contract”
has existed since 1946. W.J. Howey Co., 328 U.S. at 298–99.
Thus, Fife provides additional authority for striking
Ripple’s fourth affirmative defense. However, the cases have
distinct terms. The attorney Jeremy Hogan explained via Twitter
that the FIFE case outcome “marginally helps the SEC’s position in
its Motion to Strike Ripple’s Fair Notice Defense so the SEC filed
it with the court.” Although the SEC is trying to make a move out
of the similarities from both cases, Hogan claims that FIFE’s “was
in a very different stage of litigation and the standard is
completely different than the SEC v. Ripple case. In the “Fife”
case, the Defendant tried to argue “Fair Notice” in order to
dismiss the lawsuit entirely (and failed) because the burden is
very high on a party moving to strike a pleading. In the Ripple
case, it’s the SEC that is trying to strike the affirmative defense
of Fair Notice and it has the high burden to meet. Ripple
CEO Brad Garlighouse had remained hopeful at the end of 2021 as he
expressed to CNBC: Clearly we’re seeing good questions asked by the
judge. And I think the judge realizes this is not just about
Ripple, this will have broader implications. Related Reading
| XRP Builds Momentum With 7% Increase As Ripple Launches New
ODL Partnership The Impact On XRP Related Reading | Ripple Had
Its Strongest Year Ever Despite The Sec’s “Attack On Crypto” The
next hearing will be a key day for the outcome of the Ripple case,
thus XRP’s price. The timing is rather complicated for XRP. Its
downtrend seems to follow the general crypto market movement. XRP
is down 2.33% in the last 24 hours to $0,7634 as it shows in the
next chart: After the SEC filed the lawsuit against
Ripple in December 2002, the XRP price plunged dramatically from
$0.60 to $0.1748. It continued to drop and lose ground but remains
inside the top 10 crypto Ranking. Then, XRP recovered throughout
2021 and reached highs of $1.34 on November 10, 2021, although it
didn’t manage to close the year above $1.01. The XRP enthusiasts’
expectations are for Ripple to win the case and XRP to enter a
massive rally, surging to its all-time high of $3.4 or even double
numbers. However, the previous projections hadn’t taken into
account the current crypto market downtrend. And if the Ripple case
were to have a surprisingly negative resolution, XRP might see an
outcome just as sad.
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