BREAKING: Victory For Ripple, Judge Deems XRP Sales As Non-Investment Contracts

In a significant legal victory for Ripple, US District Judge Analisa Torres ruled in favor of Ripple in the lawsuit filed against it by the US Securities and Exchange Commission (SEC) in December 2020.

The SEC had alleged that Ripple had raised over $1.3 billion through the sale of XRP to investors, which should be classified as securities.

However, the court noted that programmatic XRP sales did not constitute investment contracts, as they lacked the economic reality of institutional sales, which cut in favor of finding “a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”

Ripple Defeats SEC’s Claims

According to the court ruling, Institutional buyers who directly purchased XRP from Ripple had a reasonable expectation that their investment would contribute to improving the XRP ecosystem and increase the value of XRP.

However, programmatic buyers accounted for less than 1% of global XRP trading volume, and the sales were “blind bid/ask transactions” where buyers could not have known if their payments went to Ripple or any other seller of XRP.

The court further noted that Ripple did not make any promises or offers concerning programmatic sales, as the company did not know who was buying the XRP, and the purchasers did not know who was selling it.

This provides much-needed regulatory clarity for the cryptocurrency industry and clarifies the legal status of XRP. However, the SEC may appeal the decision, and the legal battle is likely far from over.

Nonetheless, Ripple’s victory is a significant boost for the company, which has long argued that XRP is a legitimate cryptocurrency used for cross-border payments and not subject to SEC regulation.

Furthermore, the court’s decision to cite the Howey test to determine whether XRP sales constituted investment contracts is a major blow to the SEC’s case. The judge concluded that the SEC had failed to prove that XRP sales met the criteria for such contracts.

While the ruling guides other companies in the cryptocurrency industry, it also suggests th

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Author: Ronaldo Marquez

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