SEC Gains New Support in its Appeal Against Ripple

Better Markets, a nonprofit organization focusing on building a secure life for Americans, has filed an Amicus Brief supporting the SEC in the Ripple lawsuit. 

The company filed its brief yesterday in the U.S. Court of Appeals for the Second Circuit. According to the brief, Better Markets faulted the district court’s decision in the Ripple case, particularly the court’s decision on programmatic sales of XRP. 

#XRPCommunity #SECGov v. #Ripple #XRP @Ripple Better Markets Inc. has filed an Amicus Brief in Support of the @SECGov.https://t.co/cu8lTLBqtM

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) January 22, 2025

Better Markets’ Arguments 

The company highlighted three major arguments in the brief regarding why it believed Judge Analisa Torres erred in her ruling. 

First, it characterized XRP as a security, emphasizing that investors’ acquisition of the coin on trading platforms does not alter these characteristics. The nonprofit firm argued that these acquisitions satisfy the third prong of Howey- the expectation of profit based on the efforts of others. 

Additionally, Better Markets contended that Judge Torres’ decision conflicts with the Supreme Court’s Howey precedent and rulings from other courts. 

Furthermore, Better Markets faulted the district court for ignoring the economic realities regarding the offer and sale of XRP. In particular, the company claimed Judge Torres did not establish a link between Ripple’s efforts and investors’ expectations of profits. 

Notably, the firm criticized the court for not objectively appraising modern investors. It also accused Ripple of targeting retail investors and capitalizing on their expectation of profits based on its efforts. 

Lastly, Better Markets rebuked the district court for overlooking the harm investors may suffer if certain crypto assets deemed as securities are not subject to regulation. According to Better Markets, the district court’s decision protects sophisticated investors, leaving retail traders vulnerable. 

It is noteworthy that Better Markets has been supporting the SEC in its legal tussle against Ripple. Last year, its CEO Dennis Kelleher speculated that the SEC has a better chance of winning the appeal against Ripple, putting the odds at 90%. 

Attorney Hogan Reacts 

Meanwhile, pro-XRP legal expert Jeremy Hogan reacted to Better Markets’ amicus brief in the SEC v. Ripple lawsuit. Attorney Hogan lamented that reading Better Markets’ amicus brief was difficult because the company misconstrued the district court ruling. 

According to attorney Hogan, Judge Torres held that Ripple’s programmatic sales on digital exchanges were executed via blind bid/ask transactions. Hence, investors would not have known whether their payments went to other XRP sellers or Ripple. 

He noted that Ripple won the ruling on programmatic sales of XRP because investors did not know who they were buying the coin from. As a result, they could not have relied on the company’s efforts to make profits.  

Furthermore, Attorney Hogan criticized Better Markets for failing to address the district court’s reasoning rather than faulting the entire result. 

Upcoming Developments 

In the meantime, Ripple is expected to respond to the SEC’s opening brief submitted on January 15, 2025. Some legal experts, like Hogan, speculate that the Second Circuit will not rule on the appeal, suggesting that a new SEC leadership might drop the lawsuit. 

Discussions about a potential settlement of the case soared recently after the SEC scheduled its first closed meeting under acting chair Mark Uyeda. The meeting is expected to occur today at 2:00 p.m. (ET), with the agenda revolving around resolving litigation claims and settling injunctive actions.