Better Markets Inc., a nonprofit organization focused on financial markets, has filed an amicus brief to support the U.S. Securities and Exchange Commission (SEC) in its lawsuit against Ripple Labs. The brief argues that XRP, Ripple’s cryptocurrency, meets the Howey Test and should be classified as a security when sold on exchanges.
Better Markets Files Amicus Brief To Support SEC In Ripple Lawsuit. Source: XAn amicus brief, meaning “friend of the court,” is a legal document submitted by individuals or organizations not directly involved in a case. The purpose of such a brief is to provide additional arguments or expertise that may help the court make its decision.
Better Markets Argues XRP Meets the Howey Test
In its brief, Better Markets presented three key arguments supporting the SEC’s position. The organization claims that XRP sales to retail investors meet the third prong of the Howey Test. This test determines whether a transaction qualifies as an investment contract and, therefore, a security under U.S. law.
The filing emphasized that XRP’s classification as a security does not change based on how it is sold on digital platforms. Better Markets argued that the district court’s 2023 ruling in favor of Ripple conflicts with the Supreme Court’s definition of an investment contract in the Howey test. It also stated that the ruling found no support in the legal definitions of securities.
Did the District Court Get It Wrong? Better Markets Pushes for Reversal
Better Markets criticized the district court for allegedly overlooking the economic realities of XRP transactions. According to the organization, investors could reasonably link their profits to Ripple’s efforts, making XRP sales on exchanges resemble securities. The brief urged the appellate court to reverse the district court’s decision, which declared that XRP sales on exchanges are not investment contracts.
This filing follows the SEC’s appeal of the 2023 ruling by Judge Analisa Torres. The SEC claimed that the court made legal errors in determining that XRP sales on exchanges were not securities. The agency is now seeking to have this portion of the ruling overturned.
Attorney Jeremy Hogan Dismisses Amicus Brief Claims
Attorney Jeremy Hogan, a prominent figure in the Ripple community, criticized Better Markets’ arguments. He stated that the brief misinterpreted the district court’s reasoning.
Jeremy Hogan responds to Better Market’s Amicus Brief. Source: XHogan explained that the judge’s ruling was based on the nature of “blind bid/ask” transactions. These transactions occur when buyers do not know if they are purchasing XRP from Ripple or another party. As a result, the buyers could not rely on Ripple’s efforts to increase XRP’s value—a key factor in determining whether a sale qualifies as an investment contract.
Hogan further argued that Better Markets failed to address the legal reasoning behind the court’s decision and instead focused on broad criticisms.
Ripple v/s SEC Case Resolution in Sight? Experts Predict Settlement May Be Weeks Away
The Ripple lawsuit has been a major legal battle since it began in December 2020. The SEC accused Ripple of selling XRP as an unregistered security, prompting widespread debate about how cryptocurrencies should be classified under U.S. law. While the district court ruled in Ripple’s favor for XRP sales to retail investors, the SEC is appealing that decision.
Meanwhile, changes in SEC leadership have added a new dimension to the case. Acting SEC Chair Mark Uyeda has temporarily replaced Gary Gensler, who stepped down earlier this year. Uyeda is known for his pro-crypto stance, raising hopes among Ripple supporters for a more collaborative approach to resolving the lawsuit.
Pro-crypto attorney Marc Fagel has suggested that a settlement could be weeks away, especially if a permanent SEC chair like Paul Atkins, who is also seen as crypto-friendly, is confirmed. Ripple previously settled a related matter by agreeing to pay $125 million for institutional XRP sales, but experts believe a more comprehensive settlement may be possible.
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