Better Markets, a non-profit advocating for financial reform, has filed an Amicus brief supporting the U.S. Securities and Exchange Commission (SEC) in its ongoing legal battle with Ripple Labs.

The organization argues that a prior decision by the District Court for the Southern District of New York undermines investor protections.

Ripple’s Victory Under Scrutiny

In its brief, Better Markets claims that XRP qualifies as a security. The non-profit also asserted that the district court’s ruling weakened the Howey test, a cornerstone of U.S. securities laws, by narrowing the definition of “investment contracts.”

According to the organization, the court excluded many crypto transactions from regulations, potentially exposing investors to fraud. It claims that retail traders are at risk since the SEC now has a diminished capacity to protect less sophisticated investors from fraudulent schemes because of the court’s interpretation of the law.

Ripple won a partial victory against the SEC in a case the regulator brought against it, alleging the payments platform conducted an unregistered securities offering by selling XRP.

In that ruling, District Judge Analisa Torres declared the token was not a security when sold to retail investors on crypto exchanges. However, she found it violated securities laws when offered to institutional investors.

Legal Expert Dismisses Better Markets’ Action

Better Markets’ move comes just a week after the SEC formally appealed against Judge Torres’ ruling, asking the U.S. Court of Appeals for the Second Circuit to overturn it. While the agency called the judge’s decision “factually and legally” wrong, Ripple’s top attorney, Stuart Alderoty, described the appeal as “a rehash of already failed arguments.”

The brief has sparked reactions from legal experts and the crypto community at large. Some have pointed out ties between the Better Markets CEO Denis Kelleher and the Biden administration, where he was part of the transition team, alleging bias.

Lawyer Jeremy Hogan has criticized the organizations argument as lacking substance and failing to engage with the court’s finding.

“Better Markets Amicus Brief was hard to read. Not because I dont think this case will ever be ruled on by the appellate court, but because it COMPLETELY misses (or misconstrues?) what the Trial Judge ruled,” he said.