SEC Hits out at Ripple’s ‘Lack of Due Process’ in Letter to Judge
Ripple’s regulatory woes have deepened again after the US Securities and Exchange Commission (SEC) petitioned the judge in the company’s legal battle to dismiss arguments in the company’s defense. The SEC claimed that Ripple has attempted to “divert the court’s attention” with invalid fair notice defense claims.
The company is fighting an increasingly bitter battle against the regulator, which claims its XRP token is an “unregistered security,” and that it has sought to sell it as such.
In a strongly worded letter to the presiding district judge, Analisa Torres of the Southern District of New York, the SEC wrote that Ripple is seeking “to avoid liability for its unregistered offering by diverting the court’s attention with a number of affirmative defense arguments sounding in equity but all pigeonholed into the label ‘fair notice.’”
The letter was written by the SEC’s Senior Trial Attorney Jorge Tenreiro, who claimed that Ripple’s argument that the SEC’s failure to tell other “industry executives” of its belief that the XRP token was a security was an invalid defense.
“Ripple argues that the SEC failed to provide Ripple due process and fair notice because the SEC staff allegedly met with industry executives and failed to tell them that XRP was a security. Rather than acknowledge its own obligation to follow the law, Ripple instead posits that the SEC staff has an obligation to affirmatively warn industry participants about violations of other participants.”
This, he claimed, was a “requirement that does not exist in our legal system.”
Ripple has claimed in its defense that it was not given fair notice of the SEC’s actions and believed it had resolved issues with the Treasury’s Financial Crimes Enforcement Network (FinCEN) agency.
But Tenreiro’s letter seeks to ask the court to disregard these defenses, claiming they should be “stricken” from the record.
“Ripple […] complains that the SEC is stifling innovation. But innovation cannot come at the expense of investor protections provided by long-standing law. [...] Ripple’s fair notice defenses are improper.”
Earlier this week, Ripple said that its relationship with MoneyGram, one of its closest partners in recent years, had been “ended.” The latter has also landed in legal hot water over the nature of its relationship with Ripple.
At the time of writing (08:15 UTC), XRP trades at USD 0.447 and is down by 5% in a day and almost 1% in a week.
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