Crypto Lobbyist Group Blockchain Association Asks Court for Permission to Support Ripple Against SEC Case
The Internet Choice Advocates Network and SpendTheBits also filed amicus briefs.
The Blockchain Association, a crypto lobbying organization based in Washington, D.C., filed for permission to support Ripple as a friend of the court in its ongoing defense against the Securities and Exchange Commission (SEC) late Friday.
The SEC sued Ripple at the end of 2020 on allegations that it sold XRP as an unregistered security. The case has gone through a number of procedural motions since, and the parties recently filed their motions for summary judgement. On Friday, the Blockchain Association asked the court overseeing the case for permission to join the case, as well as the actual "amicus" brief.
"The SEC’s extremely broad interpretation of the securities laws would have devastating effects on the industry (and even outside the industry)," the motion for leave said.
A memorandum of law in support of the motion for leave said its actual brief points out different uses of crypto tokens within the industry, rather than just Ripple itself.
The brief itself says the court should look at a token's specific purpose, and argues the SEC "unlawfully" looked at secondary sales as proof that the company was violating federal securities laws.
The filing went on to say that many tokens are used in secondary market transactions, and they do not meet the different tenets of the Howey Test, a U.S. Supreme Court case generally used as precedent in trying to interpret if an asset is a security.
Much of the brief focuses on the question of how broadly securities laws apply to tokens outside of initial sales.
"The securities laws do not contemplate how an asset that may have been issued as a security can exist when it is no longer attached to any form of investment contract, a crucial consideration when attempting to apply Howey," the filing said.
Another group, the Investor Choice Advocates Network and SpendTheBits Inc., filed its own friend of the court brief on Friday, with the court's permission.
These entities argued that the SEC is using a "vague" definition of "investment contract" to bring its case, and pointed to ongoing legislative efforts to define where the SEC's jurisdiction over crypto begins and ends.
"Until a consensus is reached, the SEC has no authority to fill what it apparently perceives as a vacuum," the filing claims.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.