Ripple crushes SEC’s supplemental authority letter, XRP price wipes out losses

The US Securities and Exchange Commission (SEC) recently filed a letter of supplemental authority, citing a legal precedent that renders Ripple’s fair notice defense helpless. 

Ripple’s attorneys have responded to the letter and reminded the SEC that the legal precedent does not supply additional authority to the financial regulator to quash the remittance firm’s fair notice defense. 

Also read: XRP holders brace for impact as SEC gears up for win against payment giant Ripple

Ripple responds to SEC’s supplemental authority letter

The cross-border payment remittance firm responded to the US SEC’s supplemental authority letter. The financial regulator called the legal precedent from its recent win against Commonwealth Equity Services LLC, questioning Ripple’s fair notice defense. 

The fair notice defense under the US Constitution’s Due Process Clause requires that “the language of any criminal statute be sufficiently clear to objectively give fair notice of what is prohibited.” This is a part of Ripple’s defense against the SEC’s allegations since the beginning of the SEC v. Ripple lawsuit. 

In the reply letter, the payment giant’s attorneys highlighted the differences between the two cases. The SEC’s case against Commonwealth Equity Services LLC lacked timely evidence on the fair notice defense, from the defendant. The broker cited the SEC’s guidance and presented an expert witness. 

Ripple has presented several documents from the regulator’s filings, communication with third parties and experts and explained why the SEC did not prohibit XRP. The altcoin was not considered an “investment contract” according to the evidence presented by the defendant, building a sound fair notice defense.  

The reply letter raises a key question that has no bearing to the SEC’s additional legal precedent. 

Does the Securities Act apply to Ripple as it did to Commonwealth Equity Services LLC?

The defendants raised a key concern in the reply letter filed on Thursday, April 13. While it is clear that the Securities Act applied to the defendant in the SEC’s lawsuit against Commonwealth Equity Services LLC, the same cannot be said for Ripple. 

This makes the facts and the evidence of the two cases different. Ripple calls the Judge’s attention to Upton v. SEC, a case that the regulator excludes from its list of legal precedents. The defendants argue that this is the closest case based on both fact and evidence and conclude in the letter that the Judge ruled in favor of Upton’s fair notice defense and should do the same in SEC v. Ripple. 

The community of XRP holders rejoiced with the latest filing and the altcoin’s price resumed its uptrend, hitting the $0.54 level and wiping out losses from the past two weeks. 

As seen in the XRP/USDT four-hour price chart below, XRP price is above its 10, 50 and 200-day Exponential Moving Averages. In its recent uptrend, XRP hit the bullish target of $0.54. 

The altcoin faces resistance at $0.56 and $0.58, before hitting its March 2023 high. 

XRP/USDT 4H price chart 

The altcoin is expected to continue its uptrend in the short-term, climbing to the May 2022 high of $0.65. A decline below the trendline at $0.51 would invalidate the bullish thesis for the altcoin.