XRP Lawsuit: Better Markets Backs SEC in Ripple Case, Claims XRP Is Indeed a Security

Better Markets, a non-profit organization focused on supporting financial reforms, has voiced its support for the US Securities and Exchange Commission (SEC) in its appeal case against Ripple and XRP.

In an Amicus Brief filing with the US Court of Appeals, Better Markets said it had a “strong interest” in the case between Ripple and the SEC after US District Court Judge Analisa Torres ruled that XRP secondary market sales were non-securities.

Better Markets Criticizes Judge Torres’ Judgement

The filing claimed that Judge Torres’ judgment on the matter had “no basis in law and fact.” Per Better Markets, this judgment left investors vulnerable to fraud and abuse in the rapidly growing cryptocurrency industry.

“The court’s decision also endangers less sophisticated investors who are deemed incapable of understanding crypto issuers’ promotional claims – a result fundamentally inconsistent with the investor protection purpose at the heart of the securities laws,” the filing noted. 

The organization also added that if Judge Torres’ decision was upheld, it could undermine the SEC’s ability to protect investors from the “predatory” nature of the cryptocurrency industry. It further noted that this decision could cause harm beyond the crypto industry as other types of assets seek to evade security laws.

“The threat to investors is enormous, and Better Markets is therefore urging this court, on legal and policy grounds, to reverse the especially consequential and legally erroneous aspects of the district court’s decision,” it stated. 

Skewed Application of the Howey Test

Better Markets also criticized Judge Torres’ application of the Howey test. Per the filing, despite XRP secondary sales being considered non-securities, investors purchased the token with the expectation that they would derive profits.

The organization also stated that Ripple used a series of promotional materials to entice investors. Therefore, those who bought XRP anticipated that it would increase in value.

“It is only reasonable to conclude that these aggressive promotions would have induced investors to believe they would profit from the efforts of Ripple to enhance the value of XRP, regardless of whether their direct seller was Ripple or another trader on a platform,” it argued.

Following these arguments, Better Markets noted that it was only right that the appeals court overturned the decision made by the District Court and affirmed that XRP secondary sales were securities.

XRP, at press time, traded at $3.16 after a 0.72% decline in 24 hours. Despite this decline, the altcoin remained up by 38% in one month.