Judge Analisa Torres, who is presiding over the SEC lawsuit against Ripple, has finally delivered the long-awaited ruling.
The referee’s decision is regarded as ambiguousbecause each side won and lost some aspects of the case. Although Judge Torres ruled that XRP is not a security in and of itself, she concluded that the sale of Ripple XRP to institutional investors constitutes an unregistered offering of securities.
Yesterday, Ripple General Counsel Stuart Alderothy confirmed that the court recognized the sale of XRP to institutional clients as an investment contract.
These institutional investors have bought $728.9 million worth of XRP directly from Ripple in the past. Notably, the amount is less than the $1.3 billion claimed in the original SEC lawsuit.
Rationale for the decision
According to the ruling, sales of Ripple XRP to institutional investors were considered unregistered securities due to the agreement of these investors to block their coins for a certain period.
In this context, these XRP coins cannot be considered otherwise than as a speculative investment during the lockup period.
In addition, the ruling highlighted investment contracts showing that these investors purchased XRP for the purposes of resale. Moreover, the court ruled that these institutional clients were buying XRP in the hope of profiting from the efforts of Ripple. According to the ruling, sales of Ripple to institutional clients meet all the criteria for the Howey test.
There will be further litigation
Meanwhile, Ripple’s General Counsel (CLO) noted that there will be further litigation on the matter.
“…Further litigation will only take place on these institutional sales by court order.”