An interesting twist has arisen from this ongoing Ripple Labs legal battle with the United States Securities and Exchange Commission (SEC). The nonprofit Better Markets Inc., which advocates for fairer financial markets, is backing the SEC’s appeal of Ripple’s recent win in court.
Better Markets maintains that XRP, Ripple’s cryptocurrency, must be considered a security under U.S. law, regardless of how it is sold or who buys it. The nonprofit argues that Judge Analisa Torres’ 2023 ruling that programmatic sales of XRP on exchanges were not investment contracts was wrong.
The legal brief submitted by Better Markets stated that XRP investors purchasing the coin are looking for profits based on Ripple’s efforts to provide greater value and use for the token. This they argue fits the Howey Test, which determines whether a transaction counts as an investment contract.
They also dispute the court’s reasoning, arguing that the judge overlooked how XRP’s sales fit into a broader investment scheme. Facing further disappointment from the ruling, Better Markets claimed the court overemphasized the technicalities behind the way XRP was sold instead of the overarching truth that it is an investment.
A lawyer who popularized a following supporting Ripple Jeremy Hogan points out this is far from the Better Markets claims. He explains that the bond judge’s ruling was based on the way XRP transactions were conducted, namely blind ask trades where buyers couldn’t know whether they were buying XRP from Ripple directly or from a third party.
That makes it impossible for buyers to depend on Ripple’s efforts to generate profits from their purchases, so the transactions can’t realistically be treated as investments, Hogan argues.
The case has ignited broader debates over how cryptocurrencies should be classified under U.S. law. Although the court ruled in Ripple’s favor regarding its sales of XRP to retail investors, the SEC has since filed an appeal and is asking for this part of the ruling to be overturned. Ripple has already paid $125 million over separate sales of XRP to institutional investors, but that’s another matter.
The leadership shakeup at the S.E.C. has added even more uncertainty. Acting SEC Chair Mark Uyeda, who has been more receptive to crypto, has replaced Gary Gensler on an interim basis.
His appointment has been seen as a sign that a more crypto-friendly position might bring about a settlement. And with Paul Atkins, a pro-crypto figure, waiting to be confirmed as the new SEC chair, the future of the case might be very different.
XRP’s price has suffered slightly as the legal question remains open-ended. January 23 resulted in a 1.87% dip in the token, closing at $3.1187. That’s a huge decline next to the crypto market overall, which eked out modest gains.
If the SEC decides to pause or drop its decision, XRP could rally up and even test its all-time high of $3.55. However, if the appeal is prolonged, the price might fall below $2.50.
Also Read: Ripple vs SEC: John Deaton Says SEC Appeal Likely to Fail
