Ripple CTO Emeritus David Schwartz said the U.S. Securities and Exchange Commission’s legal theory still effectively treated XRP as a security, even though the agency had acknowledged that XRP itself is not inherently a security. In his view, the SEC’s position relied on the idea that holders expected to profit from Ripple’s efforts.
Former SEC San Francisco regional office director Marc Fagel pushed back, saying the case was about Ripple’s conduct in selling XRP rather than the token itself. He said the SEC’s argument was limited to claims that Ripple sold XRP as a security.
Schwartz disputed that framing, arguing it could not fully explain the SEC’s position on programmatic exchange sales. He said buyers in those transactions typically did not know who the seller was and may not have been exposed to statements from Ripple.
The court ultimately drew a line between different types of sales. It found that some institutional sales amounted to investment contracts, while Ripple’s programmatic sales on exchanges did not. Schwartz said that outcome showed the court had narrowed the SEC’s broader legal theory.
Ripple CTO Emeritus David Schwartz said the U.S. Securities and Exchange Commission had acknowledged that XRP is not inherently a security, but argued that the agency’s legal theory still treated XRP as one because holders were expected to profit from Ripple’s efforts.
Marc Fagel, former regional director of the SEC’s San Francisco office, said the case was aimed at Ripple’s XRP sales conduct rather than the XRP token itself. He said the SEC’s position was that Ripple sold XRP as a security.
Schwartz rejected that reading, saying the SEC’s claims over programmatic exchange sales could not be explained only by saying Ripple sold XRP as a security. In those transactions, he said, buyers usually did not know the identity of the seller and may not have encountered statements made by Ripple.
The court separated transaction types
The court ultimately distinguished between different forms of XRP sales. It found that some institutional sales qualified as investment contracts, while Ripple’s programmatic sales on exchanges did not qualify as investment contracts.
According to Schwartz, that showed the court had narrowed the SEC’s broader theory.
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