SDNY Issues Split Decision In <em>SEC V Ripple Labs</em>, Potentially Complicating Analysis Of When Crypto-Tokens Will Be Treated As Securities

On July 13, 2023, Judge Analisa Torres in the Southern District of New York issued the much-anticipated summary judgment order in the Securities and Exchange Commission's (SEC) case against Ripple Labs and two senior leaders, Bradley Garlinghouse and Christian Larsen.¹ The decision granted and denied in part both the SEC's and Ripple's cross-motions for summary judgment, leaving only the relatively narrow question of the individual defendants' alleged role in Ripple's violations unresolved.

Judge Torres's decision is the latest in a recent line of district court opinions examining, in the context of actions brought by the SEC, when digital assets should be treated as securities under the Supreme Court's "Howey test," as articulated in SEC v. W.J. Howey Co., 328 U.S. 293 (1946). Indeed, Ripple relied on language from each of SEC v. Telegram Group, Inc.; SEC v. LBRY, Inc.; and SEC v. Kik Interactive Inc. in explaining how Ripple's XRP tokens should be treated under