XRP’s Legal Saga: SEC’s Blunder Locks In Non-Security Status

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In the grand theater of legal battles, where the SEC, with all the grace of a bull in a china shop, charged forth against Ripple, the stage was set for a drama of epic proportions. The curtain has now fallen, and XRP stands, not as a security, but as a testament to the folly of overreach.

XRP Emerges Unscathed, Leaving SEC to Ponder Its Hubris

Ah, the legal status of XRP under the watchful eye of U.S. securities law-a matter as settled as a Tolstoy novel is long. Yet, like a persistent suitor, the debate stirs anew, as regulators, with all the subtlety of a sledgehammer, ponder whether they might revisit what the courts have already decreed. The Ripple ruling, a beacon of clarity in the murky waters of crypto regulation, stands firm, yet the whispers of “what if” linger like a stubborn cough in a silent room.

Lawyer Bill Morgan, a man of letters and laws, took to the digital piazza of X on January 18 to opine on the matter. In response to a post querying the finality of the SEC v. Ripple case, he declared with the confidence of a man who has read the fine print: “That is correct. And the doctrine of Res Judicata refers to both claim preclusion and issue preclusion.” Ah, Res Judicata-a Latin phrase that, when translated, might as well mean “the SEC’s goose is cooked.”

Morgan, ever the raconteur, elaborated on the SEC’s strategic blunder. “Because of the way the SEC conducted the litigation,” he mused, “specifically referring to different broad categories of sales and distinguishing between Ripple’s institutional and programmatic sales, the court was forced to analyze XRP itself.” A high-risk strategy, indeed, one that backfired with all the elegance of a misfired cannon. “Strategic level mistakes suck in litigation,” he added, a statement as undeniable as the inevitability of winter in a Russian novel.

“This was a high-risk overreach strategy by the SEC in the litigation and it backfired. Strategic level mistakes suck in litigation.”

The structure of the case, Morgan explained, was akin to a poorly constructed carriage-bound to collapse under its own weight. “Deciding whether XRP itself was or was not an investment contract was made necessary by the SEC’s framing,” he wrote. “Thus, the court could proceed to analyze the different categories of sales presented.” A pyrrhic victory for Ripple, perhaps, but a victory nonetheless.

Res judicata, or “a matter judged,” stands as a legal bulwark, preventing the same parties from relitigating a dispute once a final judgment is reached. In Ripple’s case, this doctrine provides a shield as permanent as a Tolstoy character’s despair. The SEC, having declined to appeal the ruling that XRP is not a security, has effectively locked in its status. A matter settled, regardless of the winds of regulatory change or political whimsy.

In 2020, the SEC, with all the foresight of a man walking into a blizzard without a coat, sued Ripple, alleging XRP was an unregistered security. The landmark 2023 ruling by Judge Analisa Torres-a woman of discernment and legal acumen-established that while direct institutional sales were securities, programmatic (retail) sales on exchanges were not. After years of discovery and the unveiling of the “Hinman documents,” the case reached its denouement in August 2025. Ripple, with a flourish, paid a reduced $50 million penalty-a mere fraction of the SEC’s initial $2 billion demand. Both parties, exhausted and perhaps a bit embarrassed, dropped their appeals, cementing XRP’s unique status as the only digital asset with a clear judicial ruling that it is not a security.

Morgan, ever the sage, explained the consequences of a different finding: “If the judge had ruled XRP itself a security, she would not have needed to analyze the facts and circumstances of each category. Any offer for sale of XRP by Ripple would have been deemed an investment contract.” The SEC, he noted, “lost big time on this issue,” allowing the court to distinguish between institutional and programmatic sales. A defeat as resounding as a Tolstoy protagonist’s existential crisis.

“The SEC cannot in any future claim relitigate the issue of whether XRP itself is a security. The SEC didn’t even bother to challenge this finding in its appeal of Judge Torres’s judgment.”

He concluded with the finality of a closing chapter: “Nor can the SEC relitigate claims about Ripple’s sales of XRP between 2013 and 2020. Future sales, however, remain subject to scrutiny, though constrained by the issue preclusion arising from the July 2023 ruling.” A legal victory, yes, but one that leaves the SEC licking its wounds and Ripple standing tall-at least for now.

FAQ ⏰

  • Is the SEC v. Ripple case legally closed?
    Yes, res judicata bars the SEC from relitigating claims or issues already decided in the Ripple case. The SEC’s blunder is now etched in legal stone.
  • Did the court rule that XRP itself is not a security?
    Indeed, the court found XRP itself is not an investment contract, a point the SEC, in its wisdom, chose not to appeal.
  • Can the SEC reopen past XRP sales claims?
    No, claims tied to Ripple’s XRP sales from 2013 to 2020 are precluded by final judgment. The SEC’s chariot has well and truly broken down.
  • Could future XRP sales still face scrutiny?
    Any future cases would be limited by issue preclusion from the July 2023 ruling. The SEC, it seems, must now tread carefully, lest it stumble again.

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2026-01-22 08:28