Ripple, the blockchain company behind XRP, argued that fungible cryptocurrencies are not securities when transferred in secondary transactions in a recent letter sent to the US Securities and Exchange Commission (SEC).
In its May 27 letter, Ripple cited US attorney and crypto law thought leader Lewis Cohen to support its claim. In his widely cited 2022 paper, “The Ineluctable Modality of Securities Law: Why Fungible Crypto Assets Are Not Securities,” he wrote:
“[T]here is no current basis in the law relating to ‘investment contracts’ to classify most fungible crypto assets as ‘securities’ when transferred in secondary transactions.”
In his paper, Cohen explained that in secondary transactions, an investment contract transaction is generally not present. He further claimed that fungible cryptocurrencies “neither create nor represent the necessary cognizable legal relationship between” a legal entity and the holder that is the “hallmark of a security.”
Ripple also referenced SEC Commissioner Hester Peirce’s May 19 “new paradigm” speech. She said she’d been voicing her dissent with the regulator’s approach to crypto, adding:
“Having emerged from the crypto dissent years, I am glad to be able speak to you today as the head of the Commission’s Crypto Task Force about a rational and coherent path forward and a new paradigm at the SEC.”
Peirce said that the SEC’s “approach to crypto in recent years has evaded sound regulatory practice and must be corrected.” She also said that most cryptocurrencies are not securities, adding:
“Most currently existing crypto assets in the market are not [securities]. My supplemental answer is that economic realities matter and non-security crypto assets may be distributed as part of an investment contract, which is a type of security.”
Ripple’s long fight with the SEC
The SEC had viewed a large portion of digital assets as securities, with the regulator’s former chair, Gary Gensler, stating in 2023 that most of the crypto market falls under the securities bracket. This stance led to a protracted legal battle between the SEC and Ripple.
The lawsuit first began at the end of 2020, when the SEC took action against Ripple and its executives, claiming that XRP sales constituted unregistered security offerings. Still, after the government’s stance on crypto changed with the election of current US President Donald Trump, Ripple has mostly won the battle, with the SEC recently dropping its appeal against a ruling favorable to the company.
In its recent letter to the SEC, Ripple also cited a ruling in the case noting that “the court held that certain of Ripple’s historical institutional sales of XRP were investment contracts,” while the secondary sales were not. Furthermore, the judge “determined that XRP itself is not a security.”
The US is seeking the forfeiture of 20.2 BTC seized by the Dallas FBI from the Chaos ransomware group, adding to the country’s proposed Strategic Bitcoin Reserve.
Donald Trump has reignited his row with London mayor Sir Sadiq Khan after calling him a “nasty person” who has done “a terrible job”.
During an hour-long news conference with Sir Keir Starmer in Scotland, the US president hit out at the Labour mayor, who has responded with his own snipey remarks.
Asked if he would visit London during his state visit in September, Mr Trump said: “I will, I’m not a fan of your mayor, I think he’s done a terrible job.
“A nasty person, I think.”
The prime minister then interrupted and said: “He’s a friend of mine.”
But the president added: “I think he’s done a terrible job but I will certainly visit London, I hope so.”
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Sir Sadiq’s spokesperson then released a statement saying: “Sadiq is delighted that President Trump wants to come to the greatest city in the world.
“He’d see how our diversity makes us stronger not weaker; richer, not poorer.
“Perhaps these are the reasons why a record number of Americans have applied for British citizenship under his presidency.”
Image: Sir Sadiq Khan was knighted in June. Pic: PA
They noted that Sir Sadiq has won three mayoral elections, including when Mr Trump lost the US election in 2020.
This is not the first time Mr Trump and Sir Sadiq have locked horns.
Sir Sadiq then described Mr Trump as a “poster boy for racists”.
And in November 2024, after Mr Trump won his second term, Sir Sadiq said many Londoners would be “fearful” about what it would “mean for democracy”.
However, as Sir Keir tried to show diplomacy with Mr Trump after becoming PM, Sir Sadiq said he “wanted to work closely with the American president” ahead of his inauguration in January.
The London mayor said as somebody “who believes in democracy, and voting and elections, we should recognise the fact that Donald Trump is the elected president of the United States”.
But he added: “Let’s keep our fingers crossed that this president is different from the last time he was president.”
The SEC delayed decisions on the Truth Social Bitcoin ETF and Grayscale’s Solana Trust, extending review periods as the US Congress moves with crypto regulation.