The ongoing lawsuit filed by the United States Securities and Exchange Commission against Ripple Labs is very busy as it is, with a host of motions and oppositions and replies flooding the court over the past few weeks. It would now seem that the court presided by Judge Netburn will have to contend with yet another legal document – A sur-reply against the SEC’s own reply in support of its motion to strike Ripple’s Fourth Affirmative Defense.
What is a sur-reply though? According to US Legal, it is merely an additional reply to a motion filed after the said motion has been fully briefed. In the present case, the defendants have requested leave to file a sur-reply by citing the “new arguments” raised by the SEC in its response dated 27 May.
What are these new arguments, however? According to Ripple, the regulatory agency has relied on a report by Cornerstone Research in the said reply to assert that the defendants’ fair notice defense fails. The report in question, the SEC had argued, highlighted how the agency had “brought more than seventy cases that subjected other digital assets to the application of federal securities laws.” In doing so, the plaintiff had asked the court to take judicial notice of the same.
According to Ripple’s proposed sur-reply, however,
“The SEC has never before this case asserted that a sale of digital assets outside the context of an ICO constituted an offer or sale of securities….. Not one of these cases alleged a violation of Section 5’s registration requirements for a sale of digital assets outside the context of an IPO.”
The proposed sur-reply added,
“SEC’s established pattern of asserting Section 5 violations only in the context of ICOs, and not in the context of already-established digital assets, would have given comfort to a reasonable person that XRP was not a security and that its sales did not require registration.”
The Cornerstone Research report, therefore, supports Ripple, not the SEC, the defendants concluded.
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