SEC Enforcement Action Is Not A "Final Resolution" That Ripple's Cryptocurrency Token Is A Security

On March 5, 2021, payments technology company Ripple Labs Inc. (Ripple) achieved a big win in Delaware Chancery Court bearing on whether a cryptocurrency token qualifies as a security under the US securities laws. Ripple uses blockchain innovation, including the cryptocurrency token "XRP," to send money around the world. Tetragon Financial Group Ltd. (Tetragon), an investment company and majority shareholder of Ripple's Series C preferred stock, sought a preliminary injunction to force a $175 million stock redemption by Ripple. Tetragon Fin. Grp. Ltd. v. Ripple Labs, Inc., No. 20201-007 (Del. Ch., filed Jan. 4, 2021). Tetragon argued that a securities default occurred under the parties' stockholders' agreement, triggering Ripple's redemption obligations. Ripple, for its part, took the position that no securities default had happened because the Securities and Exchange Commission (SEC) has not yet issued a final decision that the token qualifies as a security. Vice