Weekly Recap: Ripple, Coinbase Wallet, and More

XRP Declared Not A Security

- Red (@redvelvetzip)

The U.S. Securities and Exchange Commission (SEC) charged Ripple with conducting an unregistered security offering for the XRP token in December 2020. After a long-drawn-out legal battle, on July 13, 2023, the district court ruled in a motion for summary judgment:

• XRP, the token itself, is not an investment contract and thus not in and of itself a security.
• Ripple’s programmatic sales of XRP did not violate securities laws. These sales were made by Ripple on crypto exchanges where the buyer did not know who they were buying from and could not know they were investing in a common enterprise.
• Ripple’s institutional sales of XRP did violate securities laws. These sales were made directly to institutions where the buyer knew they were investing in Ripple.

The XRP token has a total supply of 100 billion, created at inception when the XRP Ledger was launched in 2012. Of the original 100 billion XRP, 80 billion was given to Ripple for the company to continue contributing code and services to the Ledger, and 20 billion was given to the three founders with various lockup agreements. The sales in question in the SEC case refer to sales made from the 80 billion XRP allocated to Ripple.