Better Markets Supports SEC, Calls for Reversal of Ripple Ruling
The nonprofit organization #BetterMarkets has officially submitted a legal document (amicus brief) supporting the U.S. Securities and Exchange Commission (SEC) in its appeal against Ripple Labs. The document urges the Second Circuit Court of Appeals to reverse the 2023 ruling of the lower court, which stated that the sale of XRP to retail investors is not subject to U.S. securities laws.
Key Point: Is XRP a Security?
Better Markets criticizes the previous ruling for incorrectly applying the Howey Test, a legal standard for determining which assets are securities. According to them, the sale $XRP on exchanges still meets sufficient criteria for securities. The organization warns that this ruling creates a legal loophole, exposing retail investors to greater risks.
“This ruling inadvertently protects institutional investors but leaves retail investors exposed,” Better Markets noted.
Ripple is accused of using aggressive promotional strategies, creating profit expectations for investors through the business and marketing of XRP.
History of the Ripple-SEC Case
The SEC filed a lawsuit #RippleLabs in December 2020, accusing the company along with CEO Brad Garlinghouse and co-founder Chris Larsen of raising over $1.3 billion through unregistered XRP transactions.
• July 2023: Ripple gains an advantage as the lower court rules that XRP transactions on exchanges do not violate securities laws.
• August 2024: Ripple is held liable with a fine of $125 million for violating securities laws in transactions with institutional investors.
• October 2024: SEC appeals the ruling concerning retail investors, emphasizing that the profit expectations created by Ripple fully meet the criteria of the Howey Test.
SEC Leadership Change: Hope for Resolution?
This event occurs against the backdrop of #SEC changing leadership. Chairman Gary Gensler, who has been criticized for his tough stance on cryptocurrencies, has resigned. Acting Chairman Mark Uyeda, who is viewed as more industry-friendly, may bring hope for a settlement agreement.
Better Markets, known for its critical stance on the cryptocurrency industry, believes that the Ripple case is an opportunity to strengthen the SEC's control over the sector. CEO Dennis Kelleher of Better Markets has repeatedly called the crypto industry a 'lawless business model' and strongly opposes products like spot Bitcoin ETFs.
Potential Impact on the Entire Industry
The Ripple lawsuit is not just an individual legal battle but also pivotal in shaping how digital assets are classified and regulated in the U.S. The final outcome will have significant implications for both the crypto industry and investors worldwide.
Warning: Investing in cryptocurrencies always carries high risks. Please consider carefully before entering the market.