Client Alert
Landmark Decision in SEC v. Ripple Labs: Digital Assets Are Not Inherently Securities
Client Alert
Landmark Decision in SEC v. Ripple Labs: Digital Assets Are Not Inherently Securities
July 17, 2023, 2:00 AM
On July 13, 2023, the United States District Court for the Southern District of New York granted in part and denied in part the parties’ cross motions for summary judgment in a highly anticipated Ripple Labs decision.
Overall, the decision is widely regarded as a victory for the digital asset community. Most significantly, the Court determined that XRP was not inherently a security and that two of the three categories of “offerings” of XRP by Ripple at issue were not “investment contacts” and therefore not securities offerings. While the Court noted that it was not expressly opining on “secondary market sales” of XRP, the impact of the Court’s reasoning on secondary market transactions is manifest—and leaves many to question whether, under the logic of the decision, any secondary market trading of digital assets would qualify as securities trading activity.
The timing of the Court’s decision is vital given that the SEC and private litigants are advancing many lawsuits and enforcement actions premised on a theory that is now being called into question by one of the nation’s most significant courts.