Better Markets Inc., a nonprofit advocating for financial market reforms, has submitted an amicus brief supporting the U.S. Securities and Exchange Commission (SEC) in its ongoing lawsuit against Ripple Labs. The organization argues that XRP, Ripple's cryptocurrency, qualifies as a security under the Howey Test and should be regulated accordingly. This filing marks a significant intervention in the landmark case, which could shape the future of cryptocurrency regulation in the U.S.

An amicus brief, or "friend of the court" document, is designed to offer expertise or arguments that may assist the court in making an informed decision. In this case, Better Markets contends that XRP's classification as a security remains consistent regardless of its method of sale on digital exchanges. The nonprofit emphasized that the district court’s 2023 decision favoring Ripple contradicts legal precedents set by the Supreme Court’s interpretation of an investment contract under the Howey Test.

Better Markets Challenges District Court Ruling🔥🔥🔥

In its filing, Better Markets laid out three core arguments to bolster the SEC's position. It asserted that XRP sales to retail investors align with the Howey Test’s third criterion, which assesses whether profits are derived from the efforts of others. The organization criticized the district court’s interpretation, claiming it ignored the economic realities of XRP transactions. Specifically, Better Markets argued that investors reasonably expected Ripple’s efforts to influence XRP’s value, making these transactions akin to securities.

The nonprofit called for a reversal of the district court’s ruling, emphasizing that the decision lacked legal grounding and conflicted with established securities law. The SEC has also appealed the 2023 ruling, arguing that the court erred in determining XRP sales on exchanges did not constitute investment contracts.

Legal Experts Weigh In💥💥💥💥

Prominent attorney Jeremy Hogan, a well-known advocate in the Ripple community, refuted the arguments presented by Better Markets. Hogan highlighted that the district court’s decision hinged on the nature of "blind bid/ask" transactions, where buyers are unaware of whether they are purchasing XRP directly from Ripple or a third party. This lack of reliance on Ripple's efforts, he explained, undermines the claim that XRP sales are investment contracts. Hogan also noted that the amicus brief failed to address the court’s legal reasoning and instead focused on generalized critiques.

As the case approaches a potential resolution, speculation about a settlement is gaining momentum. Legal analysts suggest that with acting SEC Chair Mark Uyeda—known for his pro-crypto stance—temporarily replacing Gary Gensler, a more collaborative resolution may emerge. Experts predict that a settlement could be finalized in the coming weeks, potentially offering much-needed clarity on the regulatory status of cryptocurrencies.

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