The SEC v. Ripple Labs Inc. case has been closely followed by the Token Metrics community given the relevance the decision has on the future of cryptocurrency legislation within the United States. While the case is monumental and groundbreaking for a number of reasons, the most recent ruling from the U.S. District Court, Southern District of New York provides an interesting nuance to an ever-changing landscape. Today morning, Judge Analise Torres responded to the letter that XRP token holders sent on March 19, 2021, requesting for permission to intervene in the lawsuit. Her order granted Amicus Curiae status to the XRP token holders, which is especially impressive in light of the immense backlash that the SEC expressed to oppose this motion.
The SEC wanted to reject this motion because it holds the belief that the token holders “ultimate goal in seeking to intervene is for XRP to become available again for trading on digital asset platforms so that Movants [persons who petition a court for ruling in his favor] may buy and sell XRP as a speculative investment.” Personally, I find this justification (moreso, an accusation) ridiculous because the SEC should not have an issue with XRP, or any other cryptocurrency for that matter, being a speculative investment. Similar to traditional capital markets, any investment inherently is speculative given the fact that there is potential for either risk or reward. This language is indicative of analysis performed by Kristin Smith, Executive Direction of the Blockchain Association, who observes that, “SEC guidance is primarily focused on how the agency will punish crypto entities for violations, but it provides few tangible rules of the road for crypto players to follow moving forward. This has a chilling effect on industry growth, as innovators may be hesitant to operate in the United States for fear of unwittingly falling into the SEC’s crosshairs.” Given this hostile environment that the cryptocurrency industry is facing, Judge Torres’ decision is a timely and important one. Such a decision is especially significant because holding Amicus Curiae status means much more than simply being an objective third party. Entities eligible for filing amicus briefs now serve many functions such as providing courts with unique perspectives and pointing out the consequences of a court’s action or inaction. Moreover, according to Stephen G. Masciocchi, a partner at Holland & Hart, LLP, “Amici arguably have the most impact in supporting requests for discretionary appellate review and it is difficult to overstate the value of amicus support at the certiorari stage.” For those unfamiliar with the inner workings of our nation’s complex legal system, the certiorari stage is one of the most crucial steps that a case must pass through if it is to be pulled up to the Supreme Court system. Currently, SEC v. Ripple Labs Inc. is stuck within the District Court level, but if Ripple’s case is as influential and transformative as we all anticipate it to be, it is quite likely that through the appeals process, it might end up in front of the Supreme Court of the United States.