Ripple Cites Voyager Bankruptcy Case Decision in Latest Letter to Judge Torres

Unsurprisingly, the latest filing has attracted a flurry of responses from XRP community members.

Ripple has filed another letter of notice of supplemental authority to Judge Analisa Torres in its legal battle with the United States Securities and Exchange Commission to support its fair notice defense further.

Attorney James K. Filan, a defense lawyer and former Federal prosecutor who has followed the case closely, disclosed this in a tweet yesterday, sharing a copy of the document. Notably, in the latest supplemental authority filing, the blockchain payments company cites Judge Michael E. Wiles’ decision in the Voyager bankruptcy case to overrule the SEC’s objection to Binance.US’s bid for Voyager assets.

#XRPCommunity #SEC v. #Ripple #XRP Ripple Defendants file Letter Notice of Supplemental Authority in further support of their fair notice defense. It’s the decision of Judge Michael Wiles in the Voyager bankruptcy case where Judge Wiles rejected the SEC’s https://t.co/bNlqcaCz5f… https://t.co/UZLktoFYd2

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) March 20, 2023

Unsurprisingly, the latest filing has attracted a flurry of responses from XRP community members.

Recall that, as highlighted in a previous report, Judge Wiles, in the recent ruling, bashed the regulator for fueling uncertainty in the nascent market. In other sections, the judge faulted the commission for failing to speak up earlier in the case, as highlighted by Ripple Chief Technology Officer David Schwartz in response to the latest development, describing the SEC’s actions as outrageous in eight different ways in a follow-up tweet.

The judge expressed outrage that the SEC would want to prosecute parties for carrying out transactions as ordered by the court. Moreso, because the SEC’s arguments as to why this could be the case were vague and lacking substance for the court to decide on. 

It’s just the Department of “Justice” insisting that they not be prohibited from criminally prosecuting people for doing precisely what a judge’s order would *compel* them to do despite not having raised any coherent argument that any part of the order is illegal.

— David “JoelKatz” Schwartz (@JoelKatz) March 20, 2023

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It is potentially another situation where the SEC prioritizes its agenda over consumer protection. It requested the court to delay proceedings at the expense of consumers so the agency could form a position on whether VGX is a security and whether Binance.US is an unregistered security exchange. All the while, due to legal fees, the amount of assets users could recover would continue to decline.

See the thread from ConsenSys lawyer Bill Hughes below.

Judge: you’re being vague
SEC: we’ll tell you privately
Judge: say it publicly
SEC: Fine. the Staff thinks Voyager token is a security and https://t.co/ZliEBUPQ4L is a 1934 Act exchange but Commission hasn’t said anything formal, so reject the plan.
Judge: Ya, nope https://t.co/pGwt70UtBo pic.twitter.com/Qyunc7CQ16

— Bill Hughes : wchughes.eth 🦊 (@BillHughesDC) March 15, 2023

As highlighted by Hogan & Hogan Partner Attorney Jeremy Hogan, the judge used “abnormally strong language” to point out that regulators themselves had failed to come up with a metric to decide which crypto qualifies as a security even though cryptocurrencies and exchanges have been allowed to operate for years. According to Hogan, this speaks directly to a lack of fair notice, Ripple’s defense.

Ripple (finally) filed the Voyage bankruptcy Judge’s decision.

The Judge uses abnormally strong language, stating that the U.S. regulators themselves cannot even agree on what criteria to use in deciding whether crypto is a security (Fair Notice).

…

We are getting close… https://t.co/zvLQ5zEWUV pic.twitter.com/0nCSMVuG0C

— Jeremy Hogan (@attorneyjeremy1) March 20, 2023

Attorney John E. Deaton, who represents thousands of XRP holders as a friend of the court in the legal battle, expressed hope that Judge Torres is likely already aware of the ruling as she is in the same district as Judge Wiles. In addition, Deaton asserted that it would support the defense of Ripple executives Brad Garlinghouse and Chris Larsen, accused of aiding and abetting the sale of unregistered securities in the SEC’s complaint. 

“I believe Judge Torres will rule that no reasonable jury could conclude that the two executives were reckless in not knowing XRP was a security when the SEC itself didn’t,” Deaton surmised.

I predicted over a year ago that Judge Torres will rule in favor of @bgarlinghouse and @chrislarsensf. I believe Judge Torres will rule that no reasonable jury could conclude that the two executives were reckless in not knowing #XRP was a security when the SEC itself didn’t. 👇 https://t.co/BG2ByllHRI

— John E Deaton (@JohnEDeaton1) March 20, 2023

The legal battle between the markets regulator and Ripple over whether XRP is an unregistered security has endured for over two years. Pundits believe a summary judgment ruling could come between now and mid-April.

I predicted last week. Obviously, I’m an idiot. 🙂

Filan said before March 31st.

Deaton said anytime from last week up through mid-April.

— Jeremy Hogan (@attorneyjeremy1) March 20, 2023

In a previous supplemental authority filing, Ripple cited a recent Supreme Court ruling where two justices relied on the rule of lenity to support their opinions. Notably, the rule states that where the law is unclear, court decisions should be tailored to best favor the defendant.

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