Earlier today Ripple filed its Sur-Reply regarding the SEC’s Motion to Strike the Fair Notice Affirmative Defense. Notably, SEC argued that prior lawsuits against crypto companies provided “Fair Notice” to Ripple.

The SEC and Ripple have been in a long and messy legal battle since December 2020. It is been accused that Ripple and its two key executives were selling unregistered securities knowingly.

Ripple had made it clear that SEC never issued any guidance that would indicate XRP was a security.

Ripple In Driver’s Seat

After Judge Torres ruling to unseal the three sets of documents, the revelation of two memos publicly grabbed the interest of the investors. Meanwhile, Ripple took full opportunity of its right to Sur-Reply against SEC’s motion.

Half of the lawsuits did not involve “sale of any digital assets at all” and the other half involved companies that held ICOs, writes Attorney Jeremy Hogan, a proponent of Ripple.

In the Sur-Reply, Ripple lawyers mention that this is the very first case in which the SEC has ever brought an enforcement action against a company or its individual executives for selling or distributing an established digital asset alleging that Section 5 of the Securities Act required registration of such sales. Few more noteworthy points:

  • Although the Court should not consider the Cornerstone Report in the first place, if it were to consider that report, the report would only offer further support to Ripple’s arguments.
  • The Cornerstone Report shows, the SEC’s established pattern of asserting Section 5 violations only in the context of ICOs, and not in the context of already-established digital assets, would have given comfort to a reasonable person that XRP was not a security and that its sales did not require registration.

Ripple draws conclusion over Cornerstone Report

Ripple in the Sur-Reply asked the court to disregard the Cornerstone Report and reject SEC’s request.

The Court should disregard the Cornerstone Report and should reject the SEC’s request to take judicial notice of it. If the Court does consider the Report, it provides additional support for Ripple’s Opposition to the SEC’s Motion to Strike.

Moreover, of the 37 ICO cases, 20 of them involved a claim of fraud in the offering. This case is not a fraud case. The SEC has not made and could not make any allegation that Ripple misrepresented what it was selling, or that XRP — at relevant times the third largest digital asset — was worthless.

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