The Blockchain Association has backed Ripple Labs as the latter continues its legal row with the Securities and Exchange Commission (SEC), it revealed in a recent post.
The Washington, DC-based organisation stated the ongoing case would become significant for the future of cryptocurrency.
The advocacy group stated in its post it would back the US crypto market with an amicus brief (friend of the court) after the SEC hit Ripple with a lawsuit, citing alleged unregistered securities sales via XRP in December 2020.
1/ Today we announced we filed an amicus brief supporting a correct interpretation of Howey in the SEC’s two-year legal battle against @Ripple.
— Blockchain Association (@BlockchainAssn) October 28, 2022
A judge now has the opportunity to issue a substantive opinion on how Howey applies to digital assets.
Here’s what’s at stake🧵🧵🧵
The former and current chief executives of the firm, Christian Larsen and Brad Garlinghouse, respectively, faced litigation in the court case.
Blockchain Association Statement
In the Association’s Twitter thread, it stated: “This case, which is just one in a long line of SEC efforts to regulate by enforcement, highlights the SEC’s efforts to cement and legitimize its overly broad interpretation of the Howey test.”
The US government determines investment contracts and the jurisdiction of its security laws with the Howey test, which the Blockchain Association has stated may have “devastating effects” on crypto.
It added that securities laws could “significantly restrict” cryptocurrency networks from functioning, namely in use cases such as inventory tracking, purchases, intellectual property (IP), and others.
The Association continued that the SEC disregarded precedents from the Supreme Court and Second Circuit, adding: “Though the blockchain industry is global in nature, the federal securities laws are not. The Second Circuit has repeatedly re-emphasized the Supreme Court’s lesson on this subject.”
The organisation also warned that the Court should be “mindful of the limits of these securities laws.”
Executive Director Hits Out at SEC
In a statement, Executive Director Kristian Smith said that the SEC’s “broad, haphazard interpretations” of securities laws were the “single greatest threat to the future of this rapidly growing industry.”
She slammed the SEC for targeting crypto via a “regulation by enforcement” pattern, claiming the regulatory body continued its “regulation by enforcement” pattern to punish crypto companies with “little justification or warning.
She added: “The SEC must follow the law, they cannot impose their draconian view on the entire crypto ecosystem through an enforcement action.”
Concluding, Smith said that Ripple’s decision to fight the lawsuit provided an opportunity for the cryptocurrency industry to “push back” against the pattern and “open the door to modernized standards for the industry.”
