Court Rejects Ripple’s Test, Upholds Howey Test For Crypto Transactions: Report

Key Points:

• The SEC found that XRP tokens offered by Ripple were investment contracts that violated securities laws.
• The Howey test governs the securities analysis of crypto transactions, and a variety of assets can serve as the subject of an investment contract.
• Ripple’s fair notice argument was rejected, and claiming ignorance is not a defense to violating securities laws. The decision is still under review.

SEC finds XRP tokens offered and sold by Ripple as investment contracts violating securities laws. The court agreed with the SEC that the Howey test governs the securities analysis of crypto transactions. Ripple’s made-up test was rejected, emphasizing that a variety of tangible and intangible assets can serve as the subject of an investment contract.

The recent ruling in the legal battle between Ripple and the Securities and Exchange Commission (SEC) has garnered a lot of attention in the crypto community. After more than two years of back-and-forth, a US judge has officially ruled that XRP is not a security, putting an end to the ongoing lawsuit between the two parties. The decision has had a positive impact on the price of XRP, with the cryptocurrency surging by 80% following the announcement.

The SEC’s response to the ruling was that they were pleased the court found that XRP tokens were offered and sold by Ripple as investment contracts in violation of securities laws in certain circumstances. The court agreed with the SEC that the Howey test governed the securities analysis of crypto transactions and rejected Ripple’s made-up test as to what constitutes an investment contract. The court emphasized that a variety of tangible and intangible assets can serve as the subject of an investment contract.

Despite the ongoing legal dispute having a significant impact on XRP’s price and discouraging retail investors, the latest news has turned out to be a big win for the XRP community and the crypto community as a whole. The ruling has provided clarity on the regulatory status of XRP, which should help to boost confidence in the cryptocurrency.

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