A court split one token's sales into securities and non-securities

Inherited archive entry · retained from the earlier edition. Its factual, legal and policy claims have not all been reverified for 19 September 2026. Research scope.

One token, two rulings

On 13 July 2023, Judge Analisa Torres issued an order resolving cross-motions for summary judgment in SEC v. Ripple Labs, Inc., a case the SEC had filed on 22 December 2020 alleging Ripple ran an unregistered offering that raised over $1.3 billion beginning in 2013. The order records that XRP sales fell into distinct categories: 'Institutional Sales under written contracts for which it received $728 million,' and 'Programmatic Sales on digital asset exchanges for which it received $757 million.' The court reached opposite conclusions for each, applying the same three-part Howey test throughout.

Why the buyer's position, not the token, decided the case

Institutional buyers signed contracts directly with Ripple, some requiring them to indemnify Ripple or stating they were purchasing 'solely to resell or otherwise distribute' XRP. The order concludes these provisions 'support the conclusion that the parties did not view the XRP sale as a sale of a commodity or a currency' — the buyer knowingly funded Ripple's efforts and could reasonably expect those efforts to raise XRP's price. Programmatic buyers, by contrast, bought through 'blind bid/ask transactions' on exchanges and, the order states, 'could not have known if their payments of money went to Ripple, or any other seller of XRP.' Since 2017 those sales were under 1% of global XRP trading volume. The court held a programmatic buyer 'stood in the same shoes as a secondary market purchaser,' so the Howey element requiring profit expected from another's efforts was not established, regardless of Ripple's own marketing.

The boundary the order draws and does not draw

The order rejects the idea that speculative motive alone makes a sale a security: 'a speculative motive on the part of the purchaser or seller does not evidence the existence of an “investment contract.”' It states plainly that 'XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme”' — the security question attaches to the transaction, not the asset. What the order does not decide is the status of any other token sold the same way, or the individual defendants' liability, which it leaves for further proceedings. Treat the ruling as a transaction-by-transaction analysis, not a blanket verdict on XRP.

Questions to carry forward

• Did the buyer contract directly with the issuer, or trade blind on a secondary market?
• Could the buyer reasonably expect the issuer's own efforts, rather than general market activity, to drive returns?
• Does a resale restriction or indemnity clause in the sale contract itself signal how the parties understood the transaction?

The order's real contribution is procedural rather than declaratory: it shows the same token, sold the same year by the same issuer, can be a security in one channel and not in another, because Howey asks about the structure of the transaction, not the ticker attached to it.