Ripple Labs, Inc. and the US The legal dispute between the Securities and Exchange Commission (SEC) saw a surprise development as Better Markets, Inc., a leading nonprofit organization dedicated to promoting the public interest in financial markets, filed an amicus curiae brief on January 22. filed This latest submission to the United States Court of Appeals for the Second Circuit strongly supports this Appeal of the SEC Against an earlier district court decision that narrowly defined the term “investment contract” and its potential applicability to XRP.
In sum, Better Markets criticized the district court’s interpretation of the Howe test, which has traditionally been used to determine whether a transaction qualifies as an investment contract and thus a security. According to Better Market, the lower court’s ruling excluded the improperly sold XRP tokens Secondary market from securities regulation focusing on direct purchase from the issuer as a classification criterion.
#XRPCommunity #SECGov v. #Ripple #XRP @ripple Better Markets Inc. has filed an amicus brief in support of @SECGov.https://t.co/cu8lTLBqtM
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) January 22, 2025
A last call against Ripple and XRP
“The district court dramatically narrowed the definition of ‘investment contract,’ removing many crypto offerings and potentially many other investments from the reach of the securities laws,” Better Markets’ brief claims. They argue that this interpretation contradicts longstanding legal principles that aim to accommodate evolving financial practices and protect investors from emerging risks.
“The court’s determination of the status of these secondary sales or ‘programmatic’ transactions under Howe was erroneous,” the brief states, highlighting a serious error. Better Market insists that the nature of an investor’s acquisition does not alter the fundamental expectation of profit derived from the efforts of others, a cornerstone of the Howe test.
Better Market challenges the district court’s understanding of the economic realities surrounding Ripple’s token sale, particularly the impact of Ripple’s marketing and promotional efforts on investor expectations. The brief notes, “Ripple conducted a sales campaign through a wide variety of primers, brochures, market reports, public interviews, press conferences, and social media platforms…most of which were publicly disseminated or publicly available.”
The organization also criticizes the district court’s view of retail investor prudence, stating, “The district court’s moderate view of retail investors ignores modern-day economic realities…Many retail investors use social media Promoters are increasingly exposed to new investment offers and trends through platforms that they rely on to attract funds from investors.
The brief warned of implications for investor protection if the district court’s decision stands, highlighting the potential for widespread predation in the crypto securities market, which would disproportionately affect less sophisticated retail investors. . Better Markets argues, “Without jurisdiction over these types of securities, the SEC would lose its ability to protect these two classes of investors—those who trade on exchanges and those who lack discretion.” – from widespread predictions in the crypto securities markets.”
However, it is highly doubtful whether this letter will have any significance or not. Mark Ueda’s recent appointment Ueda’s interim leadership as acting chair of the US Securities and Exchange Commission (SEC) has sparked speculation about a possible resolution of the SEC’s lawsuit against Ripple.
Notably, the SEC has scheduled a closed-door meeting chaired by Ueda for today, January 23, fueling speculation about the future of Ripple’s legal case. Rumors suggest that upcoming SEC meetings may address settlement possibilities, potentially affecting Ripple’s legal trajectory.
At press time, XRP was trading at $3.14.
Featured image created with DALL.E, chart from TradingView.com
