The ongoing legal battle between Ripple and the SEC just got a lot more interesting. A non-profit group called Better Markets threw its hat in the ring, filing a brief strongly supporting the SEC’s appeal.
Better Markets Weighs In
Better Markets is basically saying the lower court messed up its ruling on whether XRP is a security. They argue the court’s narrow definition of “investment contract” lets a lot of crypto offerings, and other investments, off the hook. This, they claim, goes against established legal principles designed to protect investors.
The Howey Test and Secondary Sales
A big part of their argument centers around the Howey test—the standard used to determine if something is a security. Better Markets says the court wrongly ignored XRP sales on secondary markets, focusing only on direct sales from Ripple. They argue that even if you buy XRP from someone else, the expectation of profit based on Ripple’s efforts remains—a key element of the Howey test.
Ripple’s Marketing and Retail Investors
Better Markets also points out Ripple’s extensive marketing campaign—brochures, interviews, social media—as evidence that investor expectations were heavily influenced by Ripple. They criticize the court for underestimating the influence of social media on retail investors, arguing that many are exposed to investment opportunities through these channels, making them vulnerable to manipulation.
The Stakes are High
Better Markets warns that if the lower court’s decision stands, it could leave many investors, especially less sophisticated ones, unprotected from scams in the crypto market. They believe the SEC needs the power to regulate these secondary market transactions to protect everyone.
A Possible Settlement on the Horizon?
However, there’s another big development. With a new acting SEC chair, Mark Uyeda, there’s talk of a possible settlement between Ripple and the SEC. The SEC has a closed-door meeting scheduled, fueling speculation about a potential deal that could change everything. At the time of writing, XRP was trading at $3.14.
