Ripple wins ruling that XRP is not a security

Court decides XRP is not a security, in favor of Ripple.

Ripple wins XRP is not a security ruling, but the judge also ruled that the sale of XRP by Ripple constitutes securities.

Ripple conducts XRP trading on exchanges and uses these sales to fund its operations. This is not an investment contract and therefore not a security. Paying wages with XRP is not an investment contract and therefore not a security. Selling XRP directly under contract is an investment contract and therefore a security. Ripple is aware that doing so without registration is illegal and may ultimately require a jury to decide whether Ripple executives aided and abetted the unregistered issuance. The SEC is expected to appeal immediately to the Second Circuit Court.

After reading the original court document, the most crucial question of whether XRP itself is considered a security has not been directly confirmed, and this document does not cover all of the SEC’s accusations. XRP argues that it is a “commodity” similar to gold, silver, and sugar, but the court believes that even so, depending on the sales situation, commodities can be considered investment contracts. Therefore, the court is examining the different sales and distribution situations surrounding XRP, and determining whether these specific situations constitute sales of securities or investment contracts, and cannot come to the conclusion that “air coins are not securities” as many people think.

This ruling by the Southern District of New York specifically notes that the court did not discuss whether secondary market sales of XRP constituted sales of investment contracts, as the SEC did not submit this as a direct issue to the court. The SEC’s main accusation was that XRP’s sales and distribution violated securities laws. For example, the accusation of up to $600 million in personal unregistered sales by founders Larsen and Garlinghouse has not been discussed in detail in this court document. So obviously, this matter is not over yet.


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