SEC V. Ripple: When A Security Is Not A Security

In a monumental decision that will likely have substantial ramifications for crypto industry developers, securities practitioners, and millions of investors and token purchasers alike, on July 13, 2023, the U.S. District Court for the Southern District of New York issued its long-anticipated opinion ruling on competing summary judgment motions in SEC v. Ripple Labs, et al., 20-cv-10832 (S.D.N.Y). Judge Analisa Torres issued a split decision, granting and denying different aspects of each of the parties' motions. Torres found that XRP, the primary digital token at issue in the matter, "is not in and of itself a 'contract, transaction [,] or scheme' that embodies the Howey requirements of an investment contract." This finding is singularly important not only for the Ripple defendants, but also to the larger digital assets industry, as the SEC has long taken the position that nearly all tokens are, in and of themselves, investment contract securities.