Judge Declares Ripple's XRP Sales Agreement Not an Investment Contract
After a prolonged three-year legal battle, Ripple has finally received an "indirect" court ruling that XRP is not a security.
Judge Declares Ripple's XRP Sales Agreement Not an Investment Contract
On the evening of July 13 (Vietnam time), the judge overseeing the lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs issued a ruling declaring that the sales agreement of XRP cannot be considered an investment contract.
[DB] Ripple Sales of XRP Do Not Constitute Offer of Investment Contracts: Judge
— db (@tier10k) July 13, 2023
Specifically, the judge ruled that selling XRP to third-party organizations through direct agreements or over-the-counter (OTC) transactions still qualifies as securities, but transactions conducted through order books of intermediary exchanges do not.
This ruling fundamentally dismisses part of the SEC's allegations that XRP is a security, as demonstrated by the investment contract nature under the Howey Test. Therefore, the court indirectly acknowledges that XRP lacks sufficient characteristics to be classified as a security.
SEC filed a lawsuit against Ripple in 2021, accusing the company of illegally offering securities and earning $1.3 billion from XRP.
Since then, Ripple has been embroiled in a legal battle with the Securities and Exchange Commission. In early June, the company seemed to make significant progress when a narrative describing the classification of cryptocurrencies as securities by a senior SEC official in 2018 was published. However, this narrative only mentioned Bitcoin and Ethereum, without any link to XRP.
However, the final judgment in the lawsuit between SEC and Ripple has yet to be issued.
XRP prices surged by 25% due to the court's ruling that XRP sales transactions are not investment contracts.
4-hour chart of the XRP/USDT pair on Binance at 10:45 PM on July 13, 2023
