As the SEC vs Ripple lawsuit drags on, lawyers representing the crypto firm and its co-defendants have sought to adduce new evidence which they hope could greatly aid their defense arguments.
On Monday, Ripple’s legal team sent a letter to Judge Analisa Torres asking her to consider a notice of supplementary authority relevant to their opposition to the SEC’s motion for summary judgement.
In the letter, the firm invoked a March 11 ruling in the Voyager Digital Holdings bankruptcy case, claiming that the said ruling “provides further support for Defendants’ fair notice defense.” Voyager was a digital asset brokerage company that went bankrupt last year following the Terra Luna collapse contagion. In trying to make its customers whole again, its liquidators have been trying to sell its assets, with several offers to buy up the firm from the likes of Binance US.
Notably, under the bankruptcy plan, voyager planned to sell its native token VGX to Binance.US, a plan vehemently objected to by the SEC, which argued that VGX had “aspects of a security.” Judge Michael Wiles, however, rejected those objections on March 11 and approved the bankruptcy plan.
In the letter, Ripple’s defence team thus argued that Judge Wiles’s basis for rejecting those objections endorsed many of their arguments. Concerning SEC’s fair notice defence, Ripple stated; –
“Judge wiles found that cryptocurrency market participants operate “in a regulatory environment that at best can be described as highly uncertain” in which regulators themselves cannot seem to agree as to whether cryptocurrencies are commodities that may be subject to regulation by the CFTC, or whether they are securities that are subject to securities laws, or neither, or even on what criteria should be applied in making the decision”-an uncertainty that has persisted despite the fact that cryptocurrency exchanges have been around for a number of years.”
Accordingly, the team noted that Judge Wiles called out the SEC “for the vagueness of their objections,” noting that the SEC had not offered any guidance on what the debtors allegedly were supposed to prove to show VGX was not a security.
“I reject the contention that the Court, and the Debtors, somehow were supposed to figure out for themselves just what ‘aspects’ of the VGX token might be considered to be aspects of a security,” Judge Wiles reportedly said.
The judge’s abnormally strong language against the SEC in Voyager’s bankruptcy decision has thus been used to point out the regulator’s discrepancies in handling crypto-related cases, a weakness Ripple hopes to leverage in its defence.
Meanwhile, as the case draws near to an end, the crypto community continues to await Judge Torres’s summary judgment decision.