Washington-based activist group Blockchain Association recently applied 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 on the grounds that it had offered XRP as an unlicensed security. The parties recently filed their applications for a summary verdict after the case underwent a series of jurisdictional grounds. The Blockchain Association requested both permissions to join the lawsuit and the actual amicus brief from the court hearing the dispute on Friday.
The request for leave stated that the excessively broad interpretation of the securities laws by the SEC “would have severe implications on the business, and even beyond the industry”.
The motion for leave’s actual brief, according to a summary of law in favor of it, outlines other uses of crypto tokens in the sector, not simply Ripple.
The brief itself claims that the SEC illegitimately examined secondary sales as evidence that the corporation was breaching federal securities laws and urges them to take a token’s specific purpose into account.
The lawsuit continued by stating that several tokens are employed in secondary market transactions and do not conform 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 constitutes a security.
The brief devoted a substantial period of time addressing the topic of how broad securities laws work for tokens outside of market launch.
The filing stated that “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 own amicus brief on Friday.
These organizations stated that the SEC is making its case based on an ambiguous definition of an “investment contract” and cited ongoing legislative initiatives to outline the SEC’s power over cryptocurrencies.
The filing asserts that the SEC lacks the authority to replace what it appears to see as a vacuum before a resolution is established.
