The verdict of the Southern District of New York was delivered on Thursday, July 13, with a mandatory clause that gives the SEC the opportunity to challenge the decision and change the course of the lawsuit in its favor.
“Having considered the economic reality and the totality of the circumstances surrounding the institutional sale, the court concludes that Ripple Labs’ institutional sale of XRP constituted an unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act,” the court said in the ruling.
At the same time, Judge Analisa Torres (Analisa Torres) ruled that the purchase and sale of the XRP cryptocurrency, made through the services of digital asset exchanges, do not qualify as an offer and sale of investment contracts.
Commenting on the ruling, the SEC spokesman said that the regulator “will make every effort to review the decision” and reserves the right to appeal.
“The court agreed with the SEC that the Howey test allows for an adequate comparative analysis of cryptocurrency transactions and securities transactions, and also rejected Ripple’s arguments about what constitutes an investment contract. We are satisfied: the court found that various tangible and intangible assets may serve as the subject of an investment contract, and that, under certain circumstances, XRP tokens have been offered and sold by Ripple to institutional clients in violation of securities laws,” the SEC said in a statement.
Commission spokesman stressed that Federal Judge Analisa Torres noted that ignorance of securities law does not absolve crypto industry representatives from liability, and ordered new court hearings to determine the personal responsibility of Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen ).
Earlier, Ripple CTO David Schwartz warned users about fake distributions of XRP tokens, which are organized by scammers who want to take advantage of the hype surrounding the company’s victory in a lawsuit with the American regulator.
Source: Bits
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