The SEC Decision On Ripple - With A Dr. Seuss Rhythm
In the land of courts and legal fights,
A judge made rulings under the bright lights.
Ripple Labs, they were in the fray,
With the SEC, they had to play.
The SEC claimed Ripple's XRP token,
Was an unregistered security, unspoken.
But the judge, he listened with a careful ear,
And partially sided with Ripple, it was clear.
He said, "Ripple's sales to institutions, indeed,
Constitute an unregistered securities deed.
But the sales on the secondary market, you see,
Were not the same, legally."
He pondered the economic reality,
And found the third Howey prong to be a formality.
For Ripple's programmatic sales, he said,
Did not offer investment contracts, as led.
The majority who bought XRP wide,
Did not invest in Ripple's ride.
Institutional buyers, a different story,
They bought from Ripple, seeking glory.
But the judge, he ruled, "XRP, my friend,
Is not a contract, it does not bend.
I look at the circumstances, the big picture,
And Ripple's different transactions I measure."
Ripple's defense of an essential ingredient,
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Was not enough, the judge was stringent.
No physical contract needed for this test,
It's the totality of circumstances that's best.
The judge assessed the Howey test with care,
Prong by prong, to see what was there.
An investment of money? Yes, indeed.
A common enterprise? That was agreed.
And the economic reality, the final prong,
Led the institutional buyers along.
They had a reasonable expectation of profit,
From Ripple's efforts, they sought to benefit.
So, the judge granted part of the SEC's plea,
For institutional sales, you see.
But programmatic sales and other distributions,
Were not considered investment contributions.
Brad Garlinghouse and Chris Larsen, they stood,
Ripple's co-founders, seeking good.
The judge said, "SEC need not show,
Their awareness of Ripple's illegal flow."
With this ruling, a precedent is set,
For future token cases, we can bet.
But for now, Ripple can breathe a bit,
As the judge's decision brings some respite.