SEC v. Ripple: Ripple Founders Made Off $600M From Individual XRP Sales

DISCUSSION

II. Analysis

B. Defendants’ Offers and Sales of XRP

The parties cross-move for summary judgment on the SEC’s claim under Section 5 of the Securities Act. Whether Defendants offered or sold “investment contracts” is a legal question that the Court resolves based on the undisputed record. See SEC v. Thompson, 732 F.3d 1151, 1160–61 (10th Cir. 2013) (collecting cases). The SEC alleges that Ripple engaged in three categories of unregistered XRP offers and sales:

(1) Institutional Sales under written contracts for which it received $728 million;

(2) Programmatic Sales on digital asset exchanges for which it received $757 million; and

(3) Other Distributions under written contracts for which it recorded $609 million in “consideration other than cash.”

See SEC Reply at 4–5, ECF No. 843. The SEC also alleges that Larsen and Garlinghouse engaged in unregistered individual XRP sales, from which they received at least $450 million and $150 million, respectively. See id. at 5. The Court shall separately analyze and evaluate each category of transaction. See Marine Bank, 455 U.S. at 560 n.11.