Judge Analisa Torres of the Southern District of New York announced two rulings on motions in the XRP lawsuit on March 11. Ripple argued that the SEC failed to provide fair notice that it would consider the token a security, depriving the business of due process. Judge Torres refused the SEC’s move to dismiss this claim, confirming that the argument is feasible in the action—that is, if accepted, the defence might be used to win the case. Judge Torres has also refused the request made by Ripple CEO Brad Garlington and executive chairman Chris Larsen to dismiss the action against them for allegedly aiding and abetting unregistered securities sales in April.
The defendants asserted in their motion that even if the accusations in the action were true, they would not constitute a viable case. Ripple CEO Garlington praised the SEC motion’s denial as a “big win” on March 12. However, the matter is still in the pleadings stage, so there are sure to be many more legal ruses ahead. Since the March 11 judgement, Ripple has moved to produce an additional report, providing an expert evaluation of XRP’s market performance.
If you weren’t paying attention then, you should be now. Huge win for Ripple today! https://t.co/dMeUQuIPHM
— Brad Garlinghouse (@bgarlinghouse) March 11, 2022
The SEC has accused Ripple of selling its XRP coin as an investment product without SEC registration from 2013 until December 2020, when the government brought a complaint. In its defence, Ripple has claimed that XRP is a digital asset for real-time global payments that is not subject to SEC oversight.
The case is notable because it is, so far, a rare occurrence of an SEC lawsuit that proceeds to trial rather than being settled out of court. If no resolution is reached, the case’s conclusion might create a precedent that will affect lawsuits against crypto firms for the foreseeable future, and it may inspire additional companies to confront the regulator in court.