Ripple | XRP is not a security
2023-07-14

The Southern District of New York concluded that Ripple’s Programmatic Sales and Other Distributions of XRP did not constitute the offer and sale of investment contracts. 

But Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act. Adam Cochran: First Judge did decide institutional sales/fundraising was securities. But the programmatic sale on exchanges didn't meet third prong of Howey. So sales to users via exchanges may be fine, as long as it was through orderbook and not ICO/IEO/Launchpad like things.  Bounties, investments in others using XRP, grants using XRP, and transfers to execs in XRP not considered securities

The judge held that the XRP token itself is not a security, but the transactions and schemes around trading it need to discuss.

The Judge: "XRP, as a digital token, is not in and of itself a contract, transaction, or scheme that embodies the Howey requirements of an investment contract.Rather, the Court examines the totality of circumstances surrounding Defendants’ different transactions and schemes involving the sale and distribution of XRP. 

ConsenSys lawyer Bill Hughes briefly explained the XRP court decision, saying that ultimately a jury will be needed to decide whether Ripple execs aided and abetted this unregistered issuance; the SEC is expected to appeal to the Second Circuit immediately.

 

