Analisa Torres, a judge for the United States District Court for the Southern District of New York, has denied Ripple CEO Brad Garlinghouse’s and co-founder Chris Larsen’s twin motions to dismiss the lawsuit that was brought against them by the U.S. Securities and Exchange Commission in December 2020, delivering a blow to the individual defendants.
The motions were filed by the two top Ripple executives last April.
The court finds that the agency has plausibly alleged that Garlinghouse and Larsen recklessly disregarded the facts “that allegedly made Ripple’s XRP amount to the unregistered sale of securities.” The SEC has also “plausibly shown” that the individual defendants made domestic offers of the token. Moreover, the court rejected the claim that their sales were predominately foreign.
In addition, the judge also denied the SEC’s motion to strike Ripple’s make-it-or-break-it “fair notice” defense.
As reported by U.Today, the SEC filed the motion last April and later added several letters of supplemental authority in order to bolster it.
The court “shall not conclude” that Ripple’s affirmative defense is invalid at this stage of the case.
The judge argues that the agency will not suffer “undue prejudice” as a result of the continuation of the defense.
Stuart Alderoty, Ripple’s general counsel, has already commented on the decision to shoot down the SEC’s motion to strike, claiming that there’s a “serious question” whether the agency whether provided the company with fair notice.
Garlinghouse also took to Twitter to describe the “fair notice” ruling as a “huge win” for the defendants without commenting on his failed motion to dismiss the lawsuit.