Today, a judge from the Southern District of New York issued her ruling on whether XRP is a security after the Securities and Exchange Commission (SEC) sued Ripple in late 2020. The ruling delivered victories for both sides, but the victory bigger was for Onda.

The judge looked at three separate sets of XRP sales to institutions, programmatic sales to public buyers via exchanges, and “other distributions” and made rulings on each.

In the critical finding, U.S. District Judge Analisa Torres concluded that public buyers would not have known their payment was going to Ripple since the tokens were indistinguishable from secondary market sales. She considered that investors had to believe that their money was going to Ripple to constitute an investment contract under the “Howey test” for a security.

“The Tribunal finds that Ripple’s programmatic sales of XRP did not constitute the offer and sale of investment contracts,” the ruling states.

Regarding “other distributions” to employees and for Ripple’s Xpring initiative to develop new software, these failed in the first Howey test as there was no investment of money.

However, regarding XRP sales to institutions, the SEC prevailed. The court was satisfied that the institutional sales met all three points of the Howey test, and in that case, Ripple made an unregistered security sale.

Despite the apparent good news, this ruling could be problematic for the crypto community. Many tokens have avoided sales to the public to circumvent the Howey test. However, they have often sold tokens to venture capital firms, either directly or through a Simple Agreement for Future Tokens (SAFT). The question is whether this decision means they do not meet the Howey test.

The price of XRP increased by a third in response to the ruling.

More to follow.