Ripple Responds to SECs Lawsuit by Submitting Notice of Supplemental Authority
Ripple and the U.S. Securities and Exchange Commission (SEC) have been engaged in a legal battle for over three and a half years. However, the SEC has now reduced its penalty demand from $2 billion to $102 million. Despite this, Ripple has rejected the SEC’s offer and has instead filed a Notice of Supplemental Authority to challenge the SEC’s regulatory approach.
On July 2, 2024, Ripple Labs submitted a Notice of Supplemental Authority in the court of Judge Analisa Torres. This notice is significant as it relates to Ripple’s opposition to the SEC’s motion for remedies and final judgment. Ripple is utilizing Binance’s recent legal victory to challenge the SEC’s methods, arguing that they lack clear rules and consistency and require formal rulemaking.
In the notice, Ripple emphasized that intangible digital assets do not fit well within the framework established by the Howey test, which is used to determine what constitutes a security. Ripple criticized the SEC’s strategy of regulating the industry through court cases, stating that this approach brings about inconsistent results and fails to provide clear guidance to market participants.
The SEC is expected to respond to Ripple’s Notice of Supplemental Authority, likely referencing the SEC vs. Terraform Labs ruling. In that case, Judge Rakoff determined that Terraform Labs and its founder violated U.S. securities laws by failing to register TerraUSD and Luna as securities. Judge Rakoff also made reference to the Programmatic Sales of XRP ruling, suggesting that Judge Torres may have made an error in her ruling.
This lawsuit’s outcome is anticipated to have a significant impact on the price of Ripple’s native token, XRP, as well as the broader cryptocurrency market. A victory for Ripple could potentially trigger an XRP rally, similar to what was observed after Ripple’s partial victory last year. Conversely, a win for the SEC could result in a decline in the crypto market.
Currently, XRP’s price has experienced a slight increase of 0.5%, trading at $0.4792 with a market capitalization of $26.68 billion. However, this is still below its recent high of $0.52, which was influenced by news regarding the potential approval of an Ethereum ETF.