David Schwartz, Ripple's Chief Technology Officer Emeritus, has accused the SEC of repeatedly labeling XRP itself a security in public statements, even after courts rejected that view. The debate erupted on X in response to former SEC attorney Marc Fagel, who argued the agency's case focused on Ripple's sales of XRP, not the token's inherent nature.
A Heated Exchange on X
Fagel wrote that to prove a Section 5 violation, the SEC needed to show Ripple sold XRP as a security, and that's exactly what they argued. He suggested the agency might take a different approach when suing exchanges, but not in the Ripple case. Schwartz countered that Fagel was oversimplifying the SEC's position, claiming their arguments and public messaging went far beyond alleging unregistered offerings.
"The complaint itself frequently refers to XRP itself as the security. The SEC's press release frequently refers to XRP itself as the security," Schwartz wrote. He accused Fagel of rewriting history by ignoring the thrust of the SEC's argument and the court's pushback.
The SEC's Evolving Position
Fagel conceded that the SEC's messaging lacked nuance and its legal theories evolved over time, but maintained the core issue was whether Ripple sold XRP as securities. Schwartz disagreed, emphasizing that courts soundly rejected the SEC's broader claims—both in filings and public statements—and that this was correctly seen as a substantial victory for Ripple.
Three years ago, U.S. District Judge Analisa Torres ruled that Ripple's programmatic sales of XRP on public exchanges did not constitute securities transactions, while institutional sales did violate federal laws. The decision held that XRP itself is not a security, reasoning that retail buyers on secondary markets lacked a reasonable expectation of profits from Ripple's efforts under the Howey Test. That mixed ruling was widely considered a partial win for Ripple.