Ripple-SEC Court Ruling: Implications for the Crypto Industry and Investors

In early July, the U.S. District Court for the Southern District of New York issued its long-anticipated opinion ruling in SEC v. Ripple Labs. They provided a split decision, granting and denying different aspects of each of the parties’ motions, and specifically found that XRP, the primary digital token at issue in the matter, “is not in and of itself a ‘contract, transaction [,] or scheme’ that embodies the Howey requirements of an investment contract.”

This finding is distinctly important not only for the Ripple defendants, but also to the larger digital assets industry, as the SEC has long taken the position that all tokens (excluding bitcoin) are, in and of themselves, investment contract securities. The ruling that XRP is not a “contract” and that it depends on the circumstances creates a new set of ambiguities.

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