Earlier today, Ripple filed its Sur-Reply regarding the SEC’s motion to invoke the Fair Notice Affirmative Defense. Notably, SEC argued that previous lawsuits against crypto firms issued a “Fair Notice” to Ripple.

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

Ripple had made it clear that the SEC has never issued any advice suggesting that XRP was a security.

Wrinkle in driver’s seat

After Judge Torres decided to disclose the three sets of documents, the disclosure of two memos publicly sparked investor interest. Meanwhile, Ripple exercised its right to Sur-Reply against the SEC’s motion.

Half of the lawsuits involved “no sale of digital assets at all” and the other half involved companies that had ICOs, writes lawyer Jeremy Hogan, a Ripple advocate.

In the Sur-Reply, Ripple attorneys state that this is the first-ever case the SEC has ever taken 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 requires registration of such sales. Some other notable points:

While the Court should not consider the Cornerstone report in the first place, considering that report would only further support Ripple’s arguments. The Cornerstone report shows that the SEC’s established pattern of alleging Section 5 violations only in the context of ICOs, and not in the context of already established digital assets, would have reassured a reasonable person that XRP was not a security and that his sale does not require registration.

Ripple Draws Conclusion on Cornerstone Report

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

The court should ignore the Cornerstone report and dismiss the SEC’s request to hear it. If the court considers the report, it provides additional support for Ripple’s opposition to the SEC’s strike motion.

Moreover, of the 37 ICO cases, 20 involved a claim of fraud in the offer. This case is not a fraud case. The SEC has not and could not argue that Ripple was misrepresenting what it was selling, or that XRP — the third-largest digital asset at relevant times — was worthless.


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This post Ripple’s Sur-Reply Puts XRP In The Driver’s Seat Against SEC

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