The Blockchain Association, a Washington, D.C.-based lobbying group promoting cryptocurrencies, applied late Friday for permission to assist Ripple in its continuing legal battle with the Securities and Exchange Commission (SEC) as a friend of the court.
At the end of 2020, the SEC filed a lawsuit against Ripple because it had offered XRP as an unregistered security. The parties recently filed their applications for summary judgement after the case underwent a series of procedural motions. The Blockchain Association requested both permissions to join the lawsuit and the actual amicus brief from the court hearing the matter on Friday.
The motion for leave said,
“The SEC’s extremely broad interpretation of the securities laws would have devastating effects on the industry (and even outside the industry).”
Ripple’s lawsuit: The saga
The motion for leave’s actual brief, according to a memorandum of law in support of it, highlights other uses of crypto tokens in the sector, not simply Ripple.
The brief itself claims that the SEC “unlawfully” examined secondary sales as evidence that the corporation was breaking federal securities laws and urges the court to consider a token’s specific purpose.
The lawsuit continued by stating that many tokens are used in secondary market transactions and do not adhere to the various criteria laid forth in the Howey Test, a Supreme Court decision that is frequently cited as a precedent for determining whether an asset qualifies as a security.
The brief spends a significant amount of time discussing the issue of how broadly securities rules apply to tokens outside of initial sales. The filing further said,
“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.”
With the court’s approval, the Investor Choice Advocates Network and SpendTheBits Inc. submitted their amicus brief on Friday.
These organizations stated that the SEC is making its case based on a “vague” definition of an “investment contract” and cited ongoing legislative initiatives to outline the SEC’s jurisdiction over cryptocurrencies.