SEC Ruling Gives Ripple Victory in XRP Crypto Case


Ripple Labs Inc scored a landmark legal victory on Thursday when a U.S. judge ruled that its XRP token was not in violation of federal securities law. The news sent the value of XRP soaring 25% according to Refinitiv Eikon data.

Although the ruling was a partial win for the U.S. Securities and Exchange Commission (SEC), which has brought numerous cases against crypto developers, it marked the first time a U.S. judge sided with a cryptocurrency company in deeming certain digital asset sales as falling outside of U.S. securities law.

The SEC had accused the company and its current and former chief executives of conducting an unregistered $1.3 billion securities offering by selling XRP, which the founders created in 2012. U.S. District Judge Analisa Torres ruled that Ripple violated federal securities law by selling the cryptocurrency directly to sophisticated investors, amounting to $728.9 million.

However, Judge Torres ruled that Ripple’s XRP sales on public cryptocurrency exchanges were not offers of securities due to buyers not having an expectation of profit tied to Ripple’s efforts. Blind bid/ask transactions were cited as an example, in which buyers “could not have known if their payments of money went to Ripple, or any other seller of XRP.” Sales on cryptocurrency platforms by executives Brad Garlinghouse and Chris Larsen, as well as employee compensation, were also deemed not to involve securities.

The judge ruled that a jury will decide whether Garlinghouse and Larsen aided in the company’s violation of law. Upon the news, Garlinghouse tweeted his appreciation for the decision, which is seen as a “tremendous event for the industry.”

The ruling excited calls for Congress to pass legislation clarifying the status of digital assets, with House of Representatives Majority Whip Tom Emmer tweeting that the ruling established “a token is separate and distinct from an investment contract it may or may not be part of” and that “now, let’s make it law.”

Gary DeWaal, an attorney at Katten Muchin Rosenman, said the ruling is likely to be helpful to Coinbase, the largest U.S. crypto exchange, which is fighting its own SEC case.

Reporting by Tom Hals in Wilmington, Delaware; Editing by Chizu Nomiyama, Conor Humphries and Leslie Adler. Our Standards: The Thomson Reuters Trust Principles.

Jody Godoy reports on banking and securities law. Reach her at

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