Better Markets urges the appeals court to reverse the SEC in the Ripple case

Non-profit organization Better Markets has thrown its weight behind the US Securities and Exchange Commission (SEC) by preparing an amicus brief in its appeal against Ripple Labs.

of Short The Second Circuit Court of Appeals asked to overturn a 2023 district court decision that held that Ripple's XRP sales to retail investors were exempt from US securities laws.

The nonprofit held that the court had misapplied the Hawaii test and threatened the validity of investor protections in the brief.

The ongoing SEC vs Ripple case has major implications for the crypto industry as it could define how digital assets are classified under securities laws.

An amicus brief is a legal document filed by a non-party with a vested interest in the case that provides information or opinions to help the court make a decision, often in appeals or public interest cases.

Short sales on XRP exchanges still qualify as securities under the Hawaii test, he says, pointing out how “investors buying those securities on trading platforms doesn't change their behavior.”

The company pointed out how the district court looked at the economic realities of Ripple's operations, clearly stating that investors expect profits from Ripple's promotional efforts.

He also warned that the decision would create a loophole for digital asset sales, exposing retailers to greater risk and weakening investor protection.

“The district court's decision has a skewed effect on protecting institutional investors, but not retail investors,” Better Markets said, asking the appeals court to correct this imbalance.

Ripple's marketing tactics, which included promoting the potential value of XRP, were designed to mislead retail buyers and create expectations of profits associated with Ripple's efforts, the brief said.

A short story

SEC first presented In a December 2020 lawsuit, Ripple accused CEO Brad Garlinghouse and co-founder Chris Larson of raising more than $1.3 billion in unregistered XRP sales.

The case, which was initiated by former SEC Chairman Jay Clayton and strengthened by Chairman Gary Gensler, argued that the agency had argued that XRP met the terms of the Hawaii test for investment contracts.

In the year In 2022, crypto exchange Coinbase filed its own amicus brief in support of Ripple, but it mainly focused on the SEC's lack of clear guidance for digital assets.

The exchange indicated that the delisting of XRP from major platforms after the lawsuit resulted in a market loss of $15 billion.

Ripple initially gained momentum in July 2023 when a district court ruled that the sale of XRP to retail investors did not violate securities laws on exchanges.

However, the same court found Ripple Responsible For $125 million in August 2024, declaring institutional XRP sales in violation of securities regulations.

SEC regularly He appealed The October 2024 retail sale decision of Ripple's transaction has created clear profit expectations among investors, satisfying Hawaii's framework. It was followed by Ripples Cross-appeal.

The regulatory agency has stepped up its fight against Ripple Labs. Filing A more detailed appeal last Wednesday based on the initial notice of appeal from October.

The issue of Ripple has also come to light Gensler's A controversial approach to crypto enforcement. Critics have accused Gensler of using Ripple as a high-profile example to assert regulatory authority over the crypto industry.

When Gensler stepped down, the SEC chairman acted pro-active Mark Uyeda He is expected to take a more amicable approach than his predecessor, fueling speculation that a settlement may be on the horizon.

Better Markets CEO Dennis Kelleher has a history of vocal opposition to crypto, repeatedly criticizing the industry.Illegal business model“and as” symbolFraud against the public.”

Last January, Kelleher sent a stern word. Letter He urged the SEC to reject applications for bitcoin exchange-traded funds (ETFs), saying the agency would make a “serious, if not historic, mistake.”

Edited by Sebastian Sinclair.