Under Torres’s ruling, in other words, XRP was simultaneously a security (in Ripple’s sales to institutional investors) and not a security (in sales to retail investors on crypto exchanges). It all hinges, in the judge’s analysis, on the expectations of the buyer.
That sounds complicated – which is exactly why defense lawyers believe that the ruling will help crypto defendants avert, or at least narrow, class actions by investors who claim they were duped into buying unregistered securities.
Securities class actions, after all, are premised on the idea that all investors in a particular corporate stock or bond are more or less the same. Torres said in her Ripple ruling that XRP purchasers aren’t interchangeable – and that securities laws don’t protect all of them.
‘Enforcement 40’ for 2020
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