As the US Securities and Exchange Commission (SEC) lawsuit against Ripple Labs awaits a judgment from the judge in charge of the Southern District Court of New York, the judge in the Voyager case may have provided the fintech startup with a winning argument.
Insolvent cryptocurrency lender Voyager Digital was recently granted permission by bankruptcy court Michael Wiles to liquidate its assets and transfer its clients to Binance.US (even though the Department of Justice vetoed the decision). In the judgment, Wiles used forceful language to address the uncertain legal status of the cryptocurrency business.
Paul Grewal, the Chief Legal Officer (CLO) of Coinbase, suggested through Twitter that everyone read the decision, highlighting a particularly striking sentence that states:
Authorities cannot appear to agree on whether cryptocurrencies are commodities subject to CFTC regulation, securities subject to securities laws, or on what criteria should be used to make the determination.
Even though crypto exchanges have been for many years, this confusion has remained. According to Jeremy Hogan, a prominent attorney in the XRP community, this language might be a winning argument for Ripple in its appeal against the SEC based on the “fair notice” defense. The fair notice defense derives from the Due Process Clause of the U.S. Constitution and requires that a criminal statute’s language be objectively explicit enough to indicate what is banned.
Jeremy Hogan believed Ripple would submit the bankruptcy ruling against Voyager to support its fair notice argument. It’s encouraging to see a court articulate the issue crypto ventures confront.”
The US government’s “Operation Choke Point” targeting the cryptocurrency sector has been more visible in recent days and weeks. The pressure is expected to increase more. John E. Deaton, an XRP community attorney, indicated that the SEC intends to increase its enforcement proceedings to over 100.
The attorney also cited a recent tweet by FOX Business reporter Eleanor Terrett, who stated that Gary Gensler is boosting the crypto enforcement workforce, despite doubling the staff responsible for crypto a year ago.
In response, the attorney representing the XRP community in action against Ripple is initiating an attempt to aggregate industry resources against the SEC.