Ripple’s David Schwartz Responds to SEC Claims on XRP Security Status

Ripple’s David Schwartz Responds to SEC Claims on XRP Security Status

In an ongoing debate regarding the classification of XRP, Ripple’s CTO Emeritus David Schwartz has pushed back against perceptions that the U.S. Securities and Exchange Commission (SEC) limited its focus solely to Ripple’s sales of the cryptocurrency. Schwartz argues that the SEC has broadly treated XRP as a security throughout its legal proceedings with Ripple.

SEC’s Stance on XRP

The SEC’s December 2020 complaint against Ripple asserted that the company and its executives sold over 14.6 billion units of what it defined as a “digital asset security called XRP,” claiming these sales raised more than $1.38 billion without proper registration. The regulator’s messaging initially concentrated on Ripple’s alleged unregistered offerings and personal sales made by its executives.

Schwartz’s Counterargument

In a statement on X, Schwartz contended that the SEC’s narrative has been inaccurately narrowed to suggest that only Ripple’s direct sales are relevant. He emphasized that the agency’s complaint consistently referred to XRP itself as being categorized as a security:

“The complaint itself frequently refers to XRP itself as the security. This is an attempt at completely rewriting history.”

This statement echoes earlier comments from former SEC attorney Marc Fagel, who indicated that the core question for the SEC was whether Ripple’s transactions involved unregistered securities. However, Schwartz stresses that this summary neglects the original context of the SEC’s arguments and the court’s responses.

Court Rulings and Implications

The 2023 court ruling, presided over by Judge Analisa Torres, drew a significant distinction between XRP and the contracts used for its sale. The court concluded that, as a digital token, XRP does not qualify as a contract or scheme by itself that would meet the Howey test for securities. This judgment protected Ripple’s programmatic sales while categorizing about $728.9 million of direct institutional sales as unregistered investment contracts.

Conclusion of the Ripple Case

Both the SEC and Ripple dispensed with their appeals in August 2025, thereby concluding the lengthy civil litigation. The final judgment included a penalty of $125.04 million and a permanent injunction against future unregistered institutional sales of XRP. As Ripple marks the third anniversary of the ruling, Schwartz maintains that the court’s rejection of the SEC’s broader assertions was crucial to Ripple’s success. The ongoing discourse highlights the complexities of XRP’s legal standing and its implications for cryptocurrency regulation in the U.S.