A federal judge has delivered a split-decision on the Ripple Labs XRP token, providing some mixed clarity on the question of whether digital tokens are or can be securities. SEC v. Ripple Labs, Inc., No. 1:20-cv-10832-AT-SN (S.D. N.Y., filed July 13, 2023). Judge Torres concluded that an XRP token is a security when sold by Ripple directly to sophisticated institutional investors capable of understanding that such tokens are “speculative value propositions,” meeting the test for an “investment contract,” but not a security when sold to “programmatic investors” (the broader public) on secondary markets (digital asset exchanges). Judge Torres noted that many statements cited by the Securities Exchange Commission (“SEC”) may not have been shared with the general public who might not know whether they were buying from Ripple or third parties in an even (bid/ask) exchange. (Additional XRP were distributed in various contexts for goods or services or as funding for initiatives.) Read More