- Better Markets, a non-profit organization, filed an amicus brief supporting the SEC’s appeal against Ripple Labs, arguing that XRP sales to retail investors should be classified as securities
- The brief challenges a 2023 district court ruling that exempted Ripple’s retail XRP sales from securities laws, claiming the court misapplied the Howey Test
- SEC filed its appeal in October 2024 after Ripple was found liable for $125 million in institutional XRP sales in August 2024
- With Gary Gensler stepping down and pro-crypto Mark Uyeda becoming acting SEC Chair, speculation about a potential settlement has increased
- The case’s outcome could have major implications for how digital assets are classified under U.S. securities laws
Better Markets, a non-profit financial advocacy organization, has joined the Securities and Exchange Commission’s legal battle against Ripple Labs by filing an amicus brief supporting the regulator’s appeal.
The brief challenges a 2023 district court decision that ruled Ripple’s XRP sales to retail investors were not subject to U.S. securities laws.
The organization’s filing argues that the district court made a fundamental error in its application of the Howey Test, which determines whether an asset qualifies as an investment contract. Better Markets specifically points to how XRP sales on cryptocurrency exchanges still meet the criteria for securities, regardless of the sale venue.
In its detailed arguments, Better Markets emphasizes that the method of acquiring digital assets does not change their fundamental nature as securities. The organization states that investors clearly expected profits based on Ripple’s promotional efforts, a key consideration under the Howey Test framework.
The filing comes at a crucial time in the long-running legal dispute between the SEC and Ripple. The regulatory agency initially sued Ripple in December 2020, alleging the company raised over $1.3 billion through unregistered XRP sales. This action was started under former SEC Chair Jay Clayton and continued under Gary Gensler’s leadership.
In July 2023, Ripple secured a partial victory when the district court ruled that its XRP sales to retail investors on digital platforms did not violate securities laws. However, the company faced a setback in August 2024 when it was ordered to pay $125 million for institutional XRP sales that were found to breach securities regulations.
The SEC formally challenged the retail sales decision in October 2024, maintaining that Ripple’s marketing created clear profit expectations among investors. Ripple responded with its own cross-appeal, setting the stage for the current legal proceedings.
Better Markets’ CEO Dennis Kelleher has consistently opposed crypto industry practices, describing them as operating under a “lawless business model.” His organization’s brief warns that the district court’s decision creates a dangerous precedent that could weaken investor protections.
The non-profit points out what it sees as an inconsistency in the current ruling, noting that it “has the perverse effect of protecting institutional investors but not retail investors.” This observation highlights the complex nature of applying traditional securities laws to digital assets.
Crypto exchange Coinbase previously filed its own amicus brief supporting Ripple in 2022, focusing on the SEC’s lack of clear guidance for digital assets. The exchange noted that XRP’s removal from major trading platforms following the initial lawsuit resulted in a $15 billion market loss.
Recent leadership changes at the SEC have sparked new discussions about the case’s future. Gary Gensler’s departure and the appointment of pro-crypto acting Chair Mark Uyeda has led to speculation about a possible settlement.
The SEC recently intensified its position by filing a more detailed appeal, building upon its initial notice from October. This move demonstrates the agency’s commitment to pursuing its case despite the leadership transition.
Ripple continues to maintain the code for the XRP blockchain while defending its position that XRP sales to retail investors should not be classified as securities. The company’s legal team argues that the district court correctly interpreted the law in its initial ruling.
The case has drawn attention from various sectors of the financial industry, with multiple organizations filing amicus briefs to provide additional perspectives to the court. These briefs help judges understand the broader implications of their decisions.
Under the new SEC leadership, a crypto regulatory task force has been established, headed by Commissioner Hester Peirce. This development has been welcomed by industry participants who hope for clearer regulatory guidance.
The timing of Better Markets’ brief coincides with broader changes in the regulatory landscape, including discussions about potential settlements for other crypto-related cases. However, no formal settlement talks between Ripple and the SEC have been confirmed.
As the appeals process continues, both sides continue to present technical legal arguments about how securities laws should apply to digital assets in modern markets. The case remains a focal point for the crypto industry and traditional finance sectors alike.
