Federal judge decides that XRP is not a security - except for institutional sales

Federal judge decides that XRP is not a security - except for institutional sales

The federal judge, who heads the case of Ripple Lab against the Securities and Exchange Commission, has decided that the XRP token cannot necessarily be classified as securities. However, this decision does not apply to the sale of the token at institutions to apply funds.

The Federal District judge Analisa Torres concluded that programmatic sales to the public and the distribution of XRP to Ripple Labs employees cannot be regarded as a sale of unregistered securities. However, the court did not take a position on secondary market sales from XRP on cryptocurrency exchanges.

The judge has determined that contracts for institutional sales of $ 728 million can actually be regarded as non-registered securities sales. In the expectation, XRP bought these investors to achieve profits from the efforts of Ripple. After examining the economic reality and the circumstances, the court came to the conclusion that these sales violate section 5 of the Securities Act, which prescribes the registration of investment contracts.

ripple Labs was founded to help banks and other financial institutions to help the fast and inexpensive transmission of funds. However, since 2020, the company has been involved in a legal dispute with the US stock exchange supervisory authority Securities and Exchange Commission. The SEC claims that Ripple and his two co-founders, CEO Bradley Garlinghouse and CEO Christian Larsen, have applied $ 1.3 billion through unregistered securities since 2013 and have been deceived by investors.

It remains to be seen how this case will develop and we will keep them up to date with current developments.