Ripple’s Chief Legal Officer Stuart Alderoty makes an important declaration, emphasizing that the company’s multi-year lawsuit against the U.S. SEC is over.
Alderoty declared in an X post yesterday that “Ripple’s case is over.” The Ripple CLO commentary suggests that the lawsuit has finally reached its conclusion in the United States District Court for the Southern District of New York (SDNY).
Court Issues Final Verdict
Recall that the ruling judge of the lawsuit, Judge Analisa Torres, issued the highly anticipated final judgment on August 7. This verdict marked the end of the legal tussle in the federal court, thereby ending any legal uncertainty surrounding Ripple’s use of XRP in relation to the SEC’s claim.
In the final judgment, Judge Torres reduced the SEC’s proposed fine from nearly $2 billion to $125 million. She also imposed an injunction on Ripple’s future sales of XRP to U.S.-based institutional clients.
While there are speculations that both parties might appeal the final verdict, Ripple’s CLO maintains that the company’s lawsuit against the SEC is over.
Ripple CLO Highlight SEC Inconsistency
According to Alderoty, while the lawsuit is over, the fair notice defense Ripple used in the case is still relevant for companies. This suggests that other companies embroiled in SEC litigation can leverage the document to bolster their defense.
It bears mentioning that a company usually adopts a fair notice defense to argue that a regulator did not provide adequate notice to the industry. In the Ripple case, the company used the defense to argue that the SEC did not notify the industry that crypto assets like XRP could be regulated under securities laws.
Responding, the SEC cited its July 2017 DAO report, in which it explained that “certain crypto asset securities are subject to U.S. securities laws.”
However, Alderoty said seven years later, the SEC apologized to a federal judge for the confusion it created by using its made-up term “crypto asset securities.”
SEC Regrets Confusion Over Its Crypto Asset Securities Definition
For context, the SEC issued the apology in its amended motion in the Binance lawsuit. According to the SEC, its use of “crypto asset securities” does not imply that tokens are inherently securities themselves.
The regulator noted that the term “crypto asset securities” is a shorthand that means the understanding, expectations, and contracts surrounding the distribution and sale of a token.
Expectedly, the SEC’s admission of wrongdoing triggered widespread criticism against the agency, with Alderoty describing the SEC as a twisted “pretzel of contradictions.”
