Catenaa, Thursday, January 30, 2025 – Better Markets, a non-profit advocacy firm, has filed an amicus brief supporting the U.S. Securities and Exchange Commission (SEC) in its appeal against Ripple Labs. The brief urges the Second Circuit Court of Appeals to overturn a 2023 ruling that exempted Ripple’s XRP sales to retail investors from securities laws.
The organization criticized the district court’s application of the Howey Test, claiming it undermines investor protections and creates loopholes for digital asset sales. It argued that XRP transactions on trading platforms meet securities criteria, highlighting that Ripple’s marketing fostered profit expectations tied to the firm’s efforts.
Ripple initially gained legal ground in 2023 when a district court ruled that retail XRP sales did not violate securities regulations. However, the same court found Ripple liable for $125 million in 2024 for institutional XRP sales.
The SEC formally appealed the retail sales decision in October 2024, contending that Ripple’s promotional strategies satisfied the Howey Test framework. Better Markets’ brief supports this stance, emphasizing risks to retail investors and the need to address regulatory gaps.
This legal battle has implications for the crypto sector, as it may redefine digital asset classifications under securities laws. Critics of SEC Chair Gary Gensler’s approach argue that the Ripple case exemplifies aggressive crypto enforcement tactics.
The appeal underscores ongoing tensions between regulators and the crypto industry as both sides vie for clarity on digital asset oversight.
