Blockchain Association Files Amicus Curiae In Ripple Case
The Washington-based crypto advocacy group has requested to file a brief in the court battle between Ripple Labs and the Securities and Exchange Commission (SEC). With its amicus curiae brief, Blockchain Association seeks to give the court a context on how the SEC ruling could affect the crypto industry.
The Blockchain Association, a Washington-based crypto advocacy group, has asked permission to file an amicus curiae brief in the court battle between Ripple Labs – creators of XRP, and the U.S Securities and Exchange Commission (SEC). The advocacy group seeks to give the court a context on how the SEC’s ruling could have wider implications on the crypto industry.
“It is no exaggeration to say that a ruling in this case, if not cabined to the particular facts and legal issues that are minimally necessary to decide this case, could have an extremely adverse effect on trillion-dollar industry, and one that – given the limitless possibilities of blockchain technology – might reflect a significant portion of the failure of the American economy,” said the Blockchain Association in a filing supporting the brief.
1/ I’m proud to announce that @BlockchainAssn has filed an amicus brief in the SEC’s case against @Ripple.— Jake Chervinsky (@jchervinsky) October 28, 2022
In short: the SEC is wrong on the law, and its pattern of regulation by enforcement is harmful to both US crypto companies and the investors that it's meant to protect. 🧵
If accepted by the U.S District Court for the Southern District of New York, where the case is being heard, the group’s comments will be taken into account to summarize the court’s judgment on the case. Although amicus curiae briefs can offer context and insight on the facts at hand, it cannot introduce new facts or evidence into a lawsuit.
SEC first filed the case against Ripple Labs back in 2020 alleging that the company failed to register XRP as a security before raising funds through token sales. While the financial watchdog claims securities fraud, Ripple argues that they have done nothing wrong and used comments made by former SEC director William Hinman in their defense. In 2018, Hinman stated that cryptocurrencies are not securities. Hinman’s speech is held as a key piece of evidence by Ripple in the lawsuit. Last month, in a landmark move, the court ordered the SEC to release related documents to Ripple Labs.
“The SEC’s draconian view that a token initially sold in an investment contract continues to be inextricably linked with that investment contract when it is subsequently transferred – even when any legal rights between the issuer and the initial purchaser are not transferred within the token – would destroy nearly an entire industry.
The SEC’s position that market participants can simply follow the securities laws falls flat, because the securities laws do not contemplate how an asset that may have been issued as a security can exist when it is no longer attached to any form of investment contract, a crucial consideration when attempting to apply the Howey Test,” stated the amicus curiae brief.
The brief seeks to provide a context on how the SEC’s ill-defined regulations regarding the use of crypto tokens could lead to the decline of the industry in the United States. The document also criticizes the financial regulator’s method of ‘regulation by enforcement’ and its “history of inconsistent, incomplete, and confusing public statements”. Several other groups including a coalition of XRP holders and XRP-based payments app SpendTheBits Inc. are preparing to submit their amicus arguments in support of Ripple Labs.
At the time of writing, Ripple’s XRP token is trading at $0.45.
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