The Blockchain Association, a crypto lobbying organization based in Washington, D.C., filed for permission to support Ripple as a friend of the court in its ongoing defense against the Securities and Exchange Commission (SEC) late Friday.
The SEC sued Ripple at the end of 2020 on allegations that it sold XRP as an unregistered security. The case has gone through a number of procedural motions since, and the parties recently filed their motions for summary judgement. On Friday, the Blockchain Association asked the court overseeing the case for permission to join the case, as well as the actual amicus brief.
“The SEC’s extremely broad interpretation of the securities laws would have devastating effects on the industry (and even outside the industry),” the motion for leave said.
A memorandum of law in support of the motion for leave said its actual brief points out different uses of crypto tokens within the industry, rather than just Ripple itself.
The brief itself says the court should look at a token’s specific purpose, and argues the SEC “unlawfully” looked at secondary sales as proof that the company was violating federal securities laws.
The filing went on to say that many tokens are used in secondary market transactions, and they do not meet the different tenets of the Howey Test, a Supreme Court case generally used as precedent in trying to interpret if an asset is a security.
Much of the brief focuses on the question of how broadly securities laws apply to tokens outside of initial sales.
“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,” the filing said.
Another group, the Investor Choice Advocates Network and SpendTheBits Inc. filed their own amicus brief on Friday, with the court’s permission.
These entities argued that the SEC is using a “vague” definition of “investment contract” to bring its case, and pointed to ongoing legislative efforts to define where the SEC’s jurisdiction over crypto begins and ends.
“Until a consensus is reached, the SEC has no authority to fill what it apparently perceives as a vacuum,” the filing claims.
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