The federal judge presiding over Ripple Lab's case against the Securities and Exchange Commission has ruled that the XRP token "is not necessarily a security on its face"—except when it was sold to raise funds from institutions.

Federal district judge Analisa Torres ruled that programmatic sales to public buyers and distributions of XRP to Ripple Labs employees did not constitute the sale of unregistered securities. The court did not address secondary market sales of XRP on cryptocurrency exchanges.

Th judge, however, did conclude that $728 million worth of contracts for institutional sales did constitute unregistered securities sales and those investors "would have purchased XRP with the expectation that they would derive profits from Ripple’s efforts."

Torres wrote: "Therefore, having considered the economic reality and totality of circumstances surrounding the Institutional Sales, the Court concludes that Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act."

Ripple Labs, which was launched to help banks and other financial institutions move money fast and with very low fees, has been battling the U.S. Securities and Exchange Commission in court since 2020.

In its lawsuit, the SEC alleged that Ripple and two of its co-founders—CEO Bradley Garlinghouse and executive chairman Christian Larsen—misled investors by raising $1.3 billion in unregistered securities offerings since 2013.

This story is developing and will be updated.

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