In a blow to the defendants, the court denied twin motions by Brad Garlinghouse and Chris Larsen to dismiss the SEC lawsuit
Analisa Torres, Judge of the United States District Court for the Southern District of New York, denied twin motions by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen to dismiss the lawsuit filed against them by the US Securities and Exchange Commission in December 2020, dealing a blow to individual defendants.
The petitions were filed by Ripple’s two top executives last April.
The court concludes that the agency plausibly alleged that Garlinghouse and Larsen recklessly ignored facts “that would have made Ripple’s XRP an unrecorded sale of securities.” The SEC has also “plausibly shown” that individual defendants have made national bids for the token. Furthermore, the court rejected the allegation that their sales were mainly foreign.
Additionally, the judge also denied the SEC’s motion to strike down Ripple’s “fair notice” defense.
As reported by U.Today, the SEC filed the petition last April and then added several additional letters of authority to bolster it.
The court “will not find” 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 defense prosecution.
Stuart Alderoty, general counsel of Ripple, has already commented on the decision to overturn the SEC’s motion to strike, saying there is a “serious question” whether the agency provided the company with fair notice.
Garlinghouse also took to Twitter to describe the “fair notice” ruling as a “huge victory” for the defendants without commenting on his failed motion to dismiss the trial.