Ripple Labs was awarded a partial win on July 13 in a lawsuit that had been filed before the United States District Court for the Southern District of New York by the Securities and Exchange Commission as far back as the year 2020. The case was presided over by Judge Analisa Torres, who issued a ruling that was partly in favor of the business. The records that were submitted on July 13 indicate that Judge Torres has awarded summary judgement in favor of Ripple Labs and has ruled that the XRP token is not a security, but solely in reference to programmatic sales on digital asset exchanges.
A huge win today – as a matter of law – XRP is not a security. Also a matter of law – sales on exchanges are not securities. Sales by executives are not securities. Other XRP distributions – to developers, to charities, to employees are not securities.
— Stuart Alderoty (@s_alderoty) July 13, 2023
(and let's start planning that proper party!)
— Brad Garlinghouse (@bgarlinghouse) July 13, 2023
Defendants’ motion for summary judgment is GRANTED as to the Programmatic Sales, the Other Distributions, and Larsen’s and Garlinghouse’s sales, and DENIED as to the Institutional Sales.
As per the court document.
In spite of this, the Securities and Exchange Commission (SEC) was able to score a win of its own when a federal court declared that XRP is a security when it is offered to institutional investors because it satisfied the requirements outlined in the Howey Test. The complaint filed by the SEC with the objective of compelling Ripple to discontinue the sale of its XRP coin on the grounds that XRP was a security and, as such, needed further oversight and regulation.
The subject of whether or not cryptocurrencies should be classified as securities has been debated for a long time. Due to the fact that the price of XRP has increased by approximately 30 percent as a result of this judgement, investors seem to regard it in a favorable light.
Ripple has previously proposed in court documents an interpretation of the Howey test that requires “essential ingredients.” According to this conception, a security was something that needed a contract that defined an investor’s rights, post-sale responsibilities on the promoter of the investment, and the right to partake in the profits of the investment. Torres did not agree with this reading, “which would call for the Court to read beyond the plain words of Howey and impose additional requirements not mandated by the Supreme Court,” she wrote. Torres said that she did not accept this view. “The Court does not see any reason to proceed with this.”
