Ripple CTO Emeritus David Schwartz has pushed back against a narrower reading of the SEC’s case, insisting the regulator repeatedly labeled XRP itself a security — not just Ripple’s sales. The debate resurfaced after former SEC attorney Marc Fagel argued the case ultimately turned on whether Ripple conducted unregistered securities offerings. Schwartz countered that the SEC’s original complaint and public statements portrayed XRP as an investment contract, a position the court later rejected.
The dispute over the SEC’s original argument
In a July 14 exchange on X, Fagel said the SEC needed to prove Ripple sold XRP as a security to establish a Section 5 violation, and that the agency did not need to address every secondary-market transaction. Schwartz agreed that Ripple’s sales were central but rejected the claim that the regulator’s argument was limited to that. “The complaint itself frequently refers to XRP itself as the security,” he wrote, calling the narrower retelling “an attempt at completely rewriting history.”
The SEC’s December 2020 complaint described XRP as a “digital asset security” and alleged that Ripple and its executives sold more than 14.6 billion units, raising over $1.38 billion without registration. Fagel later acknowledged the agency’s messaging lacked nuance and shifted during the case, but maintained the final legal question concerned Ripple’s transactions.
Court separated token from transactions
Judge Analisa Torres’ July 2023 ruling drew a clear line: XRP as a digital token was not “in and of itself” a contract, transaction or scheme under the Howey test. The court then reviewed Ripple’s sales by category. It found that about $728.9 million in direct institutional sales constituted unregistered investment contracts, while programmatic exchange sales did not meet the same test because buyers could not identify the seller.
The SEC and Ripple dismissed their appeals in August 2025, ending the civil case with a $125.04 million penalty and a permanent injunction on future unregistered institutional sales. The XRP community marked July 13 as the third anniversary of the ruling, which protected programmatic sales while leaving institutional transactions subject to securities law.
Lasting impact on XRP’s legal narrative
Schwartz said the court’s rejection of the SEC’s broader position was a major part of Ripple’s victory. Fagel countered that the outcome still centered on whether Ripple’s sales qualified as securities transactions. Their exchange highlights an ongoing dispute over the agency’s legal burden and public wording. Ripple spent about $150 million on its legal defense, and executives said the company considered closing after the SEC filed its complaint. The distinction between the token and its sales continues to shape how XRP’s legal history is described.