Company: TOXR
Filing Date: 2025-08-22
Form Type: S-1/A
Source: 0001213900-25-079981
Chunk: 135

Company: 21Shares XRP ETF
Filing Date: 2025-08-22
Form: S-1/A
Chunk 135
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 Defendants had conducted unregistered
securities offerings by selling XRP in contravention of Section 5 of the Securities Act. Under Section 5 of the Securities Act,
it is unlawful for any person, directly or indirectly to offer to sell, offer to buy or purchase or sell a “security” unless
a registration statement is in effect or has been filed with the SEC as to the offer and sale of such security to the public. The Ripple
Defendants did not dispute that they had offered to sell and sold XRP through interstate commerce and that they had not filed a registration
statement with the SEC for any offer or sale of XRP. Accordingly, the question before the S.D.N.Y. was whether the Ripple Defendants
offered to sell or sold XRP as a security.

On July 13, 2023, the S.D.N.Y.
issued several key rulings in the case. Most notably, the court did not find that XRP was inherently a security. The court distinguished
between the XRP token itself and the manner in which it was sold. The court found that the direct sale of XRP by the Ripple Defendants
to certain sophisticated individuals and entities pursuant to written contracts did constitute the unregistered offer and sale of securities
in violation of Section 5 of the Securities Act. However, the court also found that the programmatic sale of XRP by the Ripple Defendants
over digital asset trading platforms did not constitute an unregistered sale of securities. Similarly, the court found that the XRP that
Ripple Defendants granted to Ripple Labs employees as compensation or to third-party companies to incentivize the development of new
applications for XRP and the XRP Ledger also did not constitute an unregistered sale of securities.

In July 2023, another judge
in the S.D.N.Y., in litigation between the SEC and the issuer of the TerraUSD and LUNA digital assets, suggested that he disagreed with
the approach underlying the XRP decision, as did a judge in the Northern District of California in the SEC’s case against Payward,
Inc., while a judge in the District of Columbia sided with the XRP decision in the SEC’s case against Binance. In future litigation,
other courts might disagree with the assessment that XRP is not a security. The seemingly inconsistent views of different district court
judges on the security status of various digital assets, underscore the continuing uncertainty around which digital assets are securities,
and demonstrate that such factors such as how long a digital asset has been in