SEC Claims Recent Court Win Weakens Ripple’s Core Argument

In a supporting letter filed Tuesday, the SEC alleged that Ripple’s “fair notice” argument is moot, based on a recent, separate court win for the regulator


Vector-3D/Shutterstock modified by Blockworks


The SEC has claimed that its recent win against broker dealer Commonwealth Equity Services should be taken into account in its Ripple lawsuit, which could end with a summary judgment any day now. 

In a supporting letter filed Tuesday, the SEC says Ripple’s “fair notice” argument is moot, based on a recent court win for the regulator. The SEC successfully shut down this same defense argument in its case against Commonwealth, which it sued in 2019 for conflict of interest violations. 

Ripple’s fair notice defense is based on a recent Supreme Court ruling; Bittner v. United States. 

The US had made a case against Romanian immigrant Alexandru Bittner, who, with 272 bank accounts, broke the law when he failed to file a relevant report with regulators for each one. 

US authorities demanded he pay a $10,000 Bank Secrecy Act fine for each, while the Supreme Court ruled he only had to meet a one-time payment of $10,000. 

“Bittner did not learn of this reporting obligation until returning to the United States many years later. After he returned, he filed the required reports, but not in time to avoid violations,” wrote law firm Faegre Drinker in a recent blog.

The Supreme Court sided with Bittner, saying that fair notice hadn’t been given, specifically to the point that it would demand individual fines for each undisclosed bank account. Ripple is similarly arguing that fair notice was not adequately provided. 

In this week’s filing, the SEC said that based on other, long standing Supreme Court precedents, namely those established in Upton v. SEC, which established the Howey Test, have given Ripple ample time to adhere to securities laws. 

Ripple’s legal team did not return Blockworks’ request for comment.

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