Blockchain Association files amicus brief in SEC v Ripple case
- The Blockchain Association is a non-profit organization that promotes fairer and more transparent politics.
- This is the fourth amicus brief in the controversial case.
- At the moment, Ripple may have the upper hand.
What happened?
The nonprofit Blockchain Association announced this Friday that it filed a amicus brief in the SEC’s lawsuit against Ripple. The brief is intended to support Ripple’s case.
An amicus brief is a request from a person or organization (not a party to the case) to submit a brief (written information) that may 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 showing how crypto tokens are used outside the boundaries of the investment contract.
The Blockchain Association is a non-profit organization with over 80 members of the cryptocurrency and blockchain industry. The members come from the entire spectrum of the industry – blockchain projects, early stage investors, crypto trading platforms and exchanges among others. The association was founded in 2015 and is based in Washington DC
The Securities and Exchange Commission (SEC) charged Ripple Labs Inc. (Ripple) and two executives in 2020 with selling unregistered securities via a digital asset rolling 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 originally sold in an investment contract continues to be inextricably linked to that investment contract when it is later transferred — even when any legal rights between the issuer and the original purchaser are not transferred with the token — would destroy almost an entire industry ,” the assignment states.
Why did the Blockchain Association submit the letter?
In its announcement, the Blockchain Association argued that the SEC v Ripple case was an example of the SEC’s “regulation by enforcement” tactic and was aimed at legitimizing its arbitrary interpretation of the Supreme Court’s ‘Howey test’ (an unofficial test used for to determine whether an asset is a security).
“A ruling adopting the SEC’s view of the law would expand the landscape of assets 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 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 the Blockchain Association’s CEO, Kirstin Smith.
“…SEC must follow the law, they cannot impose their draconian view on the entire crypto ecosystem through an enforcement.”
Smith added that the Ripple case “provides an opportunity for the industry to push back against the SEC’s regulatory by enforcement agenda and open the door to modernized standards for the industry.”
The case so far and what lies ahead
The Blockchain Association is one of many organizations, including private companies and government agencies that have filed amicus briefs in the Ripple case – in favor of Ripple. I-Remit, Tapjets, Chamber of Digital Commerce (CDC) have filed amicus briefs in favor of Ripple.
In what is considered a small victory for Ripple, in September, US District Court Judge Analisa Torres ordered the SEC to hand over the documents related to former senior SEC official William Hinman – including the speech. The SEC had repeatedly withheld the documents in the past. The documents were delivered on 20 October.
According to Ripple CEO Brad Garlinghouse, the case could 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 where regulations and jurisdictions are expected to be more clearly defined.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional money exchange systems. She is also fascinated by the blockchain technology and its function.
