Curriculum·Graduate·G403
The Regulatory Map
SEC versus Ripple, filed December 2020. The Securities and Exchange Commission sued Ripple Labs alleging its XRP token was an unregistered security.
Lesson 1 opens on
SEC v Ripple Labs, filed December 2020
In December 2020 the US Securities and Exchange Commission sued Ripple Labs, alleging that its XRP token was an unregistered security and that Ripple had raised funds through it unlawfully. In July 2023 Judge Analisa Torres drew a line that surprised much of the market: XRP that Ripple sold to institutional buyers under written contracts, about 729 million dollars' worth, was an investment contract and therefore a security, because those buyers reasonably expected to profit from Ripple's efforts; but the same XRP sold programmatically to the public through exchanges was not a security on those facts, because those buyers did not know whether their money was even going to Ripple and their expectation was not tied to Ripple's efforts in the same way. In 2024 the court ordered Ripple to pay a 125 million dollar civil penalty on the institutional sales.
The lessons
- G403-01Is it a security: the question under everythingState the Howey test and apply its four elements to a token saleabout 32 min · opens on SEC v Ripple Labs, filed December 2020
- G403-02The US map: the SEC, the CFTC, and the taxonomyDistinguish the SEC's securities jurisdiction from the CFTC's commodities jurisdictionabout 32 min · opens on CFTC v Ooki DAO, 2022 to 2023
- G403-03GENIUS, CLARITY, and reading a law in fluxExplain how LBRY bet the company on its own reading of an unsettled securities question and lostabout 33 min · opens on SEC v LBRY, 2021 to 2023
- G403-04MiCA and the cross-border realityExplain how BitMEX's offshore registration failed to remove US jurisdiction over its US customersabout 33 min · opens on BitMEX, 2020 to 2021