While the US Securities and Exchange Commission’s (SEC) case against Ripple Labs continues to await a ruling by the judge in charge of the Southern District Court of New York, the fintech company may have received a winning argument from the judge in the Voyager case.
Bankrupt crypto lender Voyager Digital recently received approval from bankruptcy judge Michael Wiles through a ruling to sell its assets and transfer its customers to Binance.US (even though the Department of Justice vetoed the decision). In the ruling, Wiles addresses the ambiguous legal situation for the crypto industry with strong words.
Paul Grewal, Chief Legal Officer (CLO) at Coinbase, recommended via Twitter that everyone should read the ruling, pointing in particular to a striking passage which states:
Regulators themselves cannot seem to agree as to whether cryptocurrencies are commodities that may be subject to regulation by the CFTC, or whether they are securities […] subject to securities laws, or neither, or even on what criteria should be applied in making the decision.
This uncertainty has persisted despite the fact that cryptocurrency exchanges have been around for a number of years.
According to Jeremy Hogan, a popular attorney in the XRP community, this wording could be a winning argument based on the “fair notice” defense for Ripple in its case against the SEC. The fair notice defense stems from the Due Process Clause of the U.S. Constitution and requires that the wording of a criminal statute be clear enough to objectively show what is prohibited.
Jeremy Hogan opined, “Look for Ripple to file the Voyager judge’s bankruptcy decision in support of its fair notice defense. It’s good to see a judge put into words the problem that crypto projects face.”
Not Just Ripple
In recent days and weeks, the US government’s “Operation Choke Point” against the crypto industry has become increasingly apparent. And the pressure is likely to continue to grow. As XRP community attorney John E. Deaton explained, the SEC plans to expand its enforcement actions to over 100.
The attorney also referenced a recent tweet from FOX Business reporter Eleanor Terrett, who reported that Gary Gensler is increasing the crypto enforcement staff, even though he had already doubled the staff responsible for crypto a year ago
Because of this, the attorney representing the XRP community in the case against Ripple is launching an initiative to pool industry resources against the U.S. Securities and Exchange Commission.
“I’m attempting to assemble a group of companies/people who the SEC claims violated Section 5 of the Securities Act because they issued, offered or sold a token the SEC claims satisfies the Howey test,” Deaton wrote on Twitter today.
According to the attorney, it would have been helpful if the defense teams in the Ripple and LBRY cases had communicated with each other. “There is a coordinated anti-crypto effort underway. It is time we coordinate as well,” Deaton concluded.
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