Blockchain Assoc. Seeking to intervene in SEC vs Ripple

Crypto lobby group Blockchain Association has requested permission to support cross-border payments company Ripple as a friend of the court in its case against the US Securities and Exchange Commission (SEC).

According to published reports on Sunday (October 30), the Washington, DC-based organization is also asking a federal court for permission to join the suit.

“The SEC’s extremely broad interpretation of the securities laws will have devastating effects on the industry (and even outside the industry),” the Blockchain Association said in its motion.

The SEC sued Ripple and two of its top executives in December 2020 for allegedly selling unregistered securities in the form of XRP tokens created by its founders, demanding $1.3 billion in damages.

The SEC has alleged that CEO Brad Garlinghouse and Executive Chairman Chris Larsen “were objectively reckless in believing that XRP was not a security and that Ripple was on ‘fair notice’ that XRP was a security,” U.S. Magistrate Judge Sarah Netburn wrote in the order. agency to hand over the documents.

Read more: Ripple claims round victory in SEC lawsuit defining cryptos as securities

Earlier this month, Ripple claimed a victory in its case that could help decide whether cryptocurrencies are securities.

As PYMNTS noted, this issue is critical to the use of crypto as a payment currency, both because it is much more difficult to issue digital assets if they have to comply with securities regulations and because payment with securities triggers a capital gains reporting requirement from the IRS.

Although the case is unlikely to go to trial this year, Ripple’s victory stemmed from the fact that it had obtained access to internal SEC deliberations about a speech the agency’s then-director of the division of corporate finance, William Hinman, gave in 2018.

In that speech, he argued that the No. 2 cryptocurrency ethereum had transformed from a security to a non-security. It’s a position the SEC commissioners at the time never formally endorsed, and as current SEC Chairman Gary Gensler has said applies only to bitcoin.

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