On the 28th of October 2022, Jake Chervinsky, the head of policy for Blockchain Association among other things announced the submission of an amicus brief related to the SEC’s case against Ripple XRP.
1/ I’m proud to announce that @BlockchainAssn has filed an amicus brief in the SEC’s case against @Ripple.
In short: the SEC is wrong on the law, and its pattern of regulation by enforcement is harmful to both US crypto companies and the investors that it's meant to protect. 🧵
— Jake Chervinsky (@jchervinsky) October 28, 2022
The completion of the brief is clear. The SEC is wrong in the way it regulates and enforces the law, making it a hazard both to the crypto space and the US citizens it’s created to protect.
This is for a couple of reasons outlined in the amicus brief. First, the SEC has been unable to factually provide insight into the definition of an investment contract. Instead, it pretends to enforce the law while forcing its views in such a case as SEC Vs Ripple. Which is regulation by enforcement.
The SEC also hasn’t distinguished for the citizens, the difference between primary sales and transactions on the secondary market. Since the lawsuit is against the primary sales of tokens, which itself isn’t a security, the SEC fails to analyze whether the security sales of XRP also qualify as securities.
The SEC’s position of “once a security always a security, no matter what”, relies on Howey’s extreme views which are far beyond the dictates of the law. This means that any asset with a market value can be categorized as a security and this is too broad a view.
In a bid to expand its authority over crypto, the SEC states that there could be an “investment of money”. But that also is too broad a view due to the existence of airdrops. If an investment is one with intangible financial expectations, believing that the recipient will contribute in a way for the assets they did not invest money for, then anything in existence can satisfy this definition making it pointless.
Thus, in summary, the SEC is saying that all holders of XRP are “common enterprise”, that all got the token by paying for it, and all hold it to make a profit, regardless of whatever utilities they got the token for, and regardless of how they got the token.
All those assumptions on the basis that all XRP holders are the same are false arguments. And hopefully, the Blockchain Association’s brief would improve Ripple’s position in the case.
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