Ripple Labs has filed a Notice of Additional Jurisdiction to bolster its position in the ongoing legal battle with the Securities and Exchange Commission (SEC). The filing was made in the United States District Court for the Southern District of New York in response to the SEC’s motion to remedies and final judgment.
Ripple Takes Advantage of Binance Ruling
The core of the defense is based on a recent ruling by the US District Court for the District of Columbia in the case SEC v. Binance Holdings, Ltd., No. 1:23-cv-01599-ABJ-ZMF. Binance Decisionissued on June 28, 2024, partially confirmed and partially denied the SEC’s allegations that Binance engaged in the sale of unregistered securities.
The court ruled that the SEC had failed to provide sufficient evidence to show that secondary market transactions involving BNB tokens on crypto exchanges qualified as securities transactions. Ripple cites this decision as a key reference, arguing that it is relevant because of its analytical parallels to its own ongoing litigation.
In their detailed reference to the Binance ruling, Ripple’s legal team highlights a key observation from the Binance court: “(I)ntangible digital assets do not fit neatly into the rubric set out in the seven pages that comprise the Howey ruling.” This statement underscores a recurring theme in digital asset regulation, and points to the complex nature of applying traditional securities law to modern digital assets.
The court’s criticism of the SEC’s piecemeal approach to litigation was also noted in the filing, which stated: “Moreover, the agency’s decision to oversee this multibillion-dollar industry through litigation — case by case, coin by coin, court by court — is unlikely to be an efficient way to proceed, and risks inconsistent results that may leave the relevant parties and their potential customers without clear guidance.” This reflects a broader criticism within the cryptocurrency industry regarding the SEC’s regulatory strategy.
Furthermore, Ripple advocates for legal clarity regarding the legality of XRP sales, which was highlighted as a critical outcome of the court’s earlier summary judgment. “This observation supports Ripple’s argument that providing clarity on the legality of the various types of XRP sales was the most significant aspect of the court’s summary judgment decision,” the filing reads. Ripple argues that such clarity is vital not only to its business but also to the crypto market at large, and points out that regulatory clarity prior to the court’s ruling supported its stance against harsh penalties.
The filing also touches on the nature of the violations Ripple allegedly committed, arguing that the SEC’s inability to demonstrate recklessness on Ripple’s part should mitigate the severity of proposed remedies. “The lack of regulatory clarity prior to that ruling, in turn, supports Ripple’s position that the court’s finding of a strict liability violation on some of Ripple’s sales — but far less than the SEC alleged were violations — does not reflect a reckless disregard for the law,” the company’s attorneys argued.
This supplemental notice was filed by Michael K. Kellogg of Kellogg, Hansen, Todd, Figel & Frederick PLLC and Debevoise & Plimpton LLP, who is acting as counsel for Ripple Labs. Their submission seeks not only to oppose the SEC’s latest motions, but also to affirm the company’s broader arguments regarding the application of securities laws to cryptocurrency transactions. This is a key point in legal, regulatory, and academic debate as digital assets continue to challenge traditional frameworks.
At the time of writing, XRP was trading at $0.47979.
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