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The Ripple Effect: Implications of the SEC’s Partial Loss in SEC v. Ripple Labs Inc.

By  |  July 24, 2023

By: Robert Pommer, Jonathan Richman, Joshua M. Newville & Michael Guggenheim (Proskauer)

The SEC faced a major setback in its ongoing legal battle against Ripple concerning the XRP digital token. While the District Court ruled that Ripple’s initial sales of XRP to institutional investors were indeed the sale of unregistered securities, the victory felt hollow, akin to a Pyrrhic triumph, as the court determined that all other methods of Ripple’s sale or distribution of XRP did not involve unregistered securities. Notably, the court found that Ripple’s program of selling XRP to public buyers through digital asset exchanges, as well as their distribution of XRP as compensation to employees and third parties, did not qualify as offering or selling securities. Furthermore, the court dismissed the SEC’s arguments that Ripple utilized institutional buyers as underwriters to sell XRP to the public…

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