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- Blockchain Association is a non-profit advocating fairer and transparent policy.
- This is the fourth amicus brief in the controversial case.
- Presently, Ripple may have the upper hand.
What happened?
Non-profit organization Blockchain Association announced this Friday that it filed an amicus brief in the SEC’s lawsuit against Ripple. The brief is intended to support Ripple’s case.
An amicus brief is a request by a person or organization (who is not party to the case) to submit a brief (written information) which could provide context or insight into the previously disclosed details of the case. It does not provide new facts or evidence. It is intended to influence the court’s decision.
The brief contains examples which show how crypto tokens are being used outside the bounds of investment contracts.
Blockchain Association is a non-profit organization of over 80 members of the cryptocurrency and blockchain industry. Its members come from across the spectrum of the industry – blockchain projects, early stage investors, crypto trading platforms and exchanges among others. Founded in 2015, the association is based in Washington D.C.
The Securities and Exchange Commission (SEC) charged Ripple Labs Inc. (Ripple) and two executives in 2020 selling unregistered securities via a rolling digital asset security offering. The security in question is the XRP token – a cryptocurrency native to the XRP ledger created by Ripple.
“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 with the token — would destroy nearly an entire industry,” the brief noted.
Why did Blockchain Association file the brief?
In its announcement Blockchain Association argued that the SEC v Ripple case was an instance of the SEC’s “regulation by enforcement” tactic and that it was aimed at legitimizing its arbitrary interpretation of the Supreme Court’s ‘Howey test’ (an unofficial test used to determine whether an asset is a security).
“A ruling that adopts the SEC’s view of the law would expand the landscape of assets that are considered securities in a manner contrary to the Supreme Court’s intent in Howey,” It added.
“The SEC’s broad, haphazard interpretations of the securities laws currently stand as the single greatest threat to the future of this rapidly growing industry. By erratically applying these outdated standards to a modern and innovative technology, the SEC continues its “regulation by enforcement” pattern, punishing crypto companies with little justification or warning.” Wrote Blockchain Association’s Executive Director, Kirstin Smith.
“…the SEC must follow the law, they cannot impose their draconian view on the entire crypto ecosystem through an enforcement action.”
Smith added that the Ripple case “provides an opportunity for the industry to push back against the SEC’s regulation by enforcement agenda and open the door to modernized standards for the industry.”
The case so far and what lies ahead
Blockchain Association is one of the many organizations including private companies and government agencies which have filed amicus briefs in the Ripple case—favoring Ripple. I-Remit, Tapjets, the Chamber of Digital Commerce (CDC) have filed amicus briefs in favor of Ripple.
In what is considered as a small win for Ripple, this September, U.S. District Court Judge Analisa Torres ordered the SEC to hand over the documents related to former senior SEC official William Hinman—including the speech. SEC had repeatedly withheld the documents earlier. The documents were submitted on October 20th.
According to Ripple CEO Brad Garlinghouse, the case might come to an end early next year. He has stated that if the SEC agrees that XRP is a security, Ripple will consider a settlement. SEC v Ripple will be a milestone case post which regulations and jurisdictions are expected to be more clearly defined.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
