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ARTICLE · 18 JULY 2023

SEC Vs. Ripple: Understanding The Recent XRP Ruling

Gowling WLG
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In a significant decision for the digital (crypto) asset industry, on July 13, 2023, the United States District Court in the Southern District of New York (the Court) in the matter...

CanadaTechnology
Adam Garetson
Adam Garetson
Matthew Estabrooks
Matthew Estabrooks
Hyunju (Crystal) Park
Hyunju (Crystal) Park
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In a significant decision for the digital (crypto) asset industry, on July 13, 2023, the United States District Court in the Southern District of New York (the Court) in the matter of the Securities and Exchange Commission (SEC) vs. Ripple Labs, Inc. (Ripple) found (in part) in favour of Ripple, granting summary judgment allowing that the digital asset known as "XRP", created and distributed by Ripple in what were referred to as "programmatic sales", did not constitute sales of investment contracts (i.e. securities) under the oft-cited "Howey Test".

The lawsuit, brought initially by the SEC in December 2020, aimed to constrain Ripple's sales of XRP, casting XRP as a security for which sales would require compliance with additional securities law and regulations. The lawsuit had a general chilling effect on sales of XRP including in secondary markets through registered and unregistered crypto-asset trading platforms both in Canada and globally.

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