Ripple vs. SEC: Better Markets Urges Court to Reverse 'Flawed' Ruling on XRP Token Sales

In a move that has caught the attention of the cryptocurrency and regulatory communities, Better Markets, a non-profit organization dedicated to strengthening the financial system, has filed an amicus brief in the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple. The brief critiques the July 2023 ruling by U.S. District Judge Analisa Torres, which found that Ripple’s XRP token sales on secondary trading platforms were not securities under the Howey test.

Better Markets argues that the court failed to adequately consider the economic realities surrounding Ripple’s XRP sales, particularly in terms of how retail investors were targeted and encouraged to expect profits from Ripple’s efforts. The non-profit organization claims that this oversight is a critical flaw in the ruling, which could have far-reaching consequences for investor protection in the rapidly growing cryptocurrency market.

According to Better Markets, the court's decision has “dramatically narrowed the definition of an investment contract,” leading to concerns that everyday American investors may be left vulnerable to fraud and manipulation in the cryptocurrency space. The group stresses that without proper regulatory oversight, the risks of fraud could increase, especially in secondary trading platforms where a large portion of crypto transactions take place.

“If this ruling stands, a huge number of everyday American investors will be far more vulnerable to fraud and abuse in the rapidly expanding and extraordinarily risky market for cryptocurrency investments,” Better Markets warns. The group asserts that without SEC jurisdiction over crypto assets, it could become much harder to protect investors from potential risks.

This amicus brief comes at a time when Ripple and its supporters are optimistic that a new U.S. administration, under President-elect Donald Trump, could lead to a resolution or settlement of the case. Reports of a meeting between Trump and Ripple executives further fuel speculation that the four-year battle could soon come to an end. Despite this optimism, Better Markets maintains that the integrity of the U.S. financial system and the protection of investors must take precedence.

By urging the court to reverse the July 2023 ruling, Better Markets is seeking to ensure that the SEC retains the necessary authority to regulate crypto assets, particularly those that may be classified as securities. The outcome of this case could have major implications for the future of cryptocurrency regulation, particularly in the context of secondary market trading and the broader legal framework for digital assets in the U.S.