Supreme Court Ruling Backs XRP ‘Fair Notice’ Defense: Ripple

While we await an outcome to the XRP case, Ripple is keeping the judge up to speed with supposedly relevant Supreme court rulings

article-image

Exclusive art by Axel Rangel, modified by Blockworks

share

Ripple Labs’ lengthy battle with the SEC is going down the wire. 

Both sides have been waiting for US District Judge Analisa Torres to rule on whether Ripple’s years-long selling of XRP constituted an unregistered securities offering.

A conclusion could be months away, but the SEC and Ripple can still submit pleas with the court to consider new information. Ripple’s most recent filing points to a recent Supreme Court ruling, which touches on the so-called “fair notice” defense employed by its counsel. 

The Due Process Clause of the US Constitution requires individuals be given fair notice of which actions are prohibited by law. For Ripple, the fair notice notice defense goes like this: It couldn’t have known to register XRP with securities regulators, as the agency had never provided enough clarity on what makes a security within the crypto context.

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 one, while the Supreme Court recently ruled he only had to pay just one, worth $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.

In Bittner’s case, the Supreme Court found that fair notice hadn’t been given, specifically to the point that it would demand individual fines for each undisclosed bank account. 

Drawing supposed parallels between Bittner and Ripple execs, Ripple Labs’ counsel says Bittner’s recent ruling is analogous to its fight against the SEC, and should be taken into consideration.

Ripple Labs relied on SEC’s previous statements and actions that led them to understand that XRP was not a security, or so its defense goes. Therefore, the firm had no reason to believe that they were violating securities laws.

Whether Judge Torres feels the same way is another matter. Torres is expected to rule on both sides’ summary judgements sometime this year, which, outside of a settlement, would end the case without a jury.

David Canellis contributed reporting.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Blinks Report Image.png

Research

Blinks enable the ability to vampire attack user monetization of existing networks by inserting onchain and financialized functionalities directly within the popular social feeds and digital experiences of today.

article-image

Kalshi founder Tarek Mansour said Thursday marked the “the first trade on regulated election markets in nearly a century”

article-image

I was excited about being on the precipice of realigning societal incentives and solving many issues plaguing our modern financial world

article-image

Cypherpunk Holdings has rebranded to Sol Strategies in a pivot to a Solana-first investment approach

article-image

BitGo’s wrapped bitcoin (wBTC) has a new custodial challenger

article-image

Make no mistake: Tether makes a ton of money. But exactly how much depends a lot on the price of bitcoin.

article-image

A new report on stablecoin activity in emerging markets shows their immense popularity in Nigeria