In response to Terraform Labs’ motion to dismiss on 21 July 2023, the SEC pointed out several issues it has with Judge Torres’ decision on XRP. This separate case involves Terraform Labs and its founder, Do Kwon, who stand accused of engineering a multi-billion dollar crypto asset securities fraud. The SEC’s recent stance on their lawsuit against Ripple Labs emerged in the context of another legal battle. “ XRP, as a digital token, is not in and of itself a “contract, transaction or scheme” that embodies the Howey requirements of an investment contract.“ Here is what Judge Torres said about the XRP token: For substantially the same reasons discussed above … Because the Court determines that the record does not establish the first Howey prong as to the Other Distributions, the Court does not reach whether the second or third Howey prongs have been satisfied … Garlinghouse’s offer and sale of XRP on digital asset exchanges did not amount to offers and sales of investment contracts.“ Thus, as a matter of law, the record cannot establish the third Howey prong as to these transactions. “ Like Ripple’s Programmatic Sales, Larsen’s and Garlinghouse’s XRP sales were programmatic sales on various digital asset exchanges through blind bid/ask transactions … Larsen and Garlinghouse did not know to whom they sold XRP, and the buyers did not know the identity of the seller. In particular, with regard to Larsen’s and Garlinghouse’s XRP sales, the judge said: As for the SEC’s motion for summary judgment on the aiding and abetting claim against Larsen and Garlinghouse, it was DENIED. However, the court denied Ripple’s motion concerning the Institutional Sales. On the other hand, the court granted Ripple’s motion for summary judgment regarding the Programmatic Sales, the Other Distributions, and the sales made by Larsen and Garlinghouse. After reviewing the case, the court made a decision, partially granting and partially denying the motions from both the SEC and Ripple and its executives.Īccording to the ruling, the court granted the SEC’s motion for summary judgment concerning the Institutional Sales but denied it for other matters. The SEC further accused Garlinghouse and Larsen of aiding and abetting these violations committed by Ripple.īoth parties had submitted their summary judgment motions to the court. The SEC claimed that Ripple and its leaders unlawfully offered and sold securities, which breached Section 5 of the Securities Act of 1933. and its two senior executives, Bradley Garlinghouse and Christian A. Securities and Exchange Commission (SEC) had filed a lawsuit against Ripple Labs Inc. Analisa Torres, a district judge at the United States District Court for the Southern District of New York, gave her ruling in the SEC vs Ripple Labs lawsuit, which was initiated in December 2020. As you probably already know, on 13 July 2023, Hon.

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