Case 1:20-cv-10832-AT-SN Document 818 Filed 04/13/23 Page 1 of 2

April 13, 2023
VIA ECF
Hon. Analisa Torres
United States District Court
Southern District of New York500 Pearl Street
New York, NY 10007
Re:SEC v. Ripple Labs Inc., et al., No. 20-cv-10832 (AT) (SN) (S.D.N.Y.)

Dear Judge Torres:
Defendants Ripple Labs Inc., Bradley Garlinghouse, and Christian A. Larsen(collectively “Defendants”) respectfully respond to the SEC’s notice of supplemental authority,
which asserts that SEC v. Commonwealth Equity Servs., LLC, No. 1:19-cv-11655, 2023 WL
2838691 (D. Mass. Apr. 7, 2023), an out-of-circuit, unpublished district court opinion, provides“additional authority” for rejecting Defendants’ fair notice defense. See ECF No 817 at 2. It
does not.
In Commonwealth, the defendant adduced no contemporaneous evidence supporting its
defense that market participants lacked fair notice of an obligation to disclose economic
conflicts of interest under the Investment Advisers Act of 1940. It merely quoted SEC
guidance and presented a paid expert who opined that he believes (in retrospect) that theguidance did not require certain disclosures. See Commonwealth, 2023 WL 2838691, at *9.
Here, by contrast, there is abundant evidence – including extensive factual evidence from theSEC’s own files and its communications with third parties – showing that reasonable market
participants, trying to understand what the SEC would permit or prohibit, concluded that
Defendants’ offers and sales of XRP were not “investment contracts,” and told the SEC so. See
ECF No. 675 at 45-46. There is also abundant evidence that the SEC was not only aware ofthis widespread regulatory confusion, but helped to sow it by repeatedly offering (and thendisclaiming) vague guidance that differed from the Howey test. See id. at 47-48. The “cleardirective” from Commonwealth, 2023 WL 2838691, at *9, is absent here.
Moreover, in Commonwealth¸ there was no dispute that the Investment Advisers Act
applied to the defendant’s conduct and required the defendant to disclose economic conflicts ofCase 1:20-cv-10832-AT-SN Document 818 Filed 04/13/23 Page 2 of 2

April 13, 2023
Page 2interest. In this case, the threshold issue – and source of widespread regulatory uncertainty – iswhether the Securities Act even applies to Defendants’ offers and sales of XRP (it does not).
The SEC’s boast of the “unbroken chain of district court decisions rejecting fair notice
defenses, on summary judgment, in SEC enforcement actions” is irrelevant. ECF No. 817 at 1.
The Court has already rejected the SEC’s reliance on these cases. See ECF No. 440 at 9 & n.4.
None of those other cases dealt with XRP and the facts Defendants adduced in support of theirfair notice defense. The closest case, Upton – which the SEC excludes from its list because it isan appellate decision – is binding precedent, and ruled in favor of the defendant’s fair notice
defense. This Court should do the same, and Commonwealth does not change that.

Respectfully submitted,/s/ Michael K. Kellogg
Michael K. Kellogg
KELLOGG, HANSEN, TODD, FIGEL,& FREDERICK, P.L.L.C.
Sumner Square
1615 M Street, N.W., Suite 400
Washington, D.C. 20036+1 (202) 326-7900

CLEARY GOTTLIEB STEEN &HAMILTON LLP
2112 Pennsylvania Avenue, N.W.
Washington, D.C. 20037+1 (202) 974-1680
Counsel for Defendant Bradley Garlinghouse

DEBEVOISE & PLIMPTON LLP
919 Third Avenue
New York, NY 10022+1 (212) 909-6000

PAUL, WEISS, RIFKIND, WHARTON &GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019+1 (212) 373-3000

Counsel for Defendant Ripple Labs Inc.

Counsel for Defendant Christian A. Larsen

cc:All Counsel of Record (via ECF)