- Ripple is challenging the SEC’s claim that they were not given fair notice of its alleged violations.
- The SEC has cited SEC vs. Commonwealth Equity Services LLC to support their position.
- Ripple has arguments against this, claiming the prior case does not apply in the same way to them.
Overview of the Situation
Ripple, a company involved with cryptocurrency, is currently locked in a legal battle with the US Securities and Exchange Commission (SEC). The SEC has accused Ripple of conducting an unregistered securities offering in violation of federal law. Ripple claims that it was not given fair notice of these alleged violations and is pushing back against the charges. To support its position, the SEC has cited its precedent-setting case from 2017: SEC vs. Commonwealth Equity Services LLC.
In this case, Commonwealth Equity Services LLC was charged with failing to register as a broker-dealer before engaging in securities transactions. The court ruled that since there had been similar cases prior to this one, Commonwealth should have known about their obligations under federal law and had sufficient “fair notice” of their potential liability. As such, they were held liable for their actions. The SEC believes that Ripple should be held to the same standard; if similar cases have been decided in favor of the government, then Ripple should have been aware that it may be liable for any potential violations.
Ripple argues that its situation is different than that faced by Commonwealth Equity Services LLC and therefore cannot be held to the same standard or liability level as them. They claim that even though both companies are involved in financial services and technologies, their respective activities are significantly different and thus do not warrant being treated similarly under federal law. Additionally, Ripple claims that it did not receive adequate warning from either regulators or other authorities regarding its potential liability regarding any alleged violations prior to being charged by the SEC; as such, they believe they did not receive proper “fair notice” before being charged by the government body.