SEC’s View That Crypto Tokens Are Securities Causes Legal Woes for Ripple

By Ciaran Connelly – Feb. 11, 2021 – Bloomberg Law

The SEC’s enforcement action against Ripple and its principals illustrates the factors used to determine if a digital asset is a security. Blockchain companies should tread carefully until the U.S. regulatory landscape for crypto tokens is reformed, warns Ciaran Connelly, a partner and head of blockchain law at Ball Janik LLP.

Over the past month, Ripple Labs Inc. has been beset by legal difficulties stemming from its sale of XRP—a digital asset or crypto token. In late December, the Securities and Exchange Commission filed an enforcement action alleging that XRP is a security and that Ripple and its principals had sold nearly $1.4 billion worth of XRP in unregistered securities sales since 2013.

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