Ripple CTO Says SEC Treated XRP as Security Before 2023 Ruling

Schwartz's Claim on SEC Communications

Ripple Chief Technology Officer David Schwartz said the SEC treated XRP as a security in multiple internal documents and legal filings before the July 2023 court judgment that decoupled the token from Ripple's sales practices. Schwartz did not specify which filings or communications he was referencing, but his statement suggests the SEC's position on XRP's classification shifted after the ruling.

The 2023 Court Ruling's Impact

In July 2023, a federal judge ruled that Ripple's sales of XRP to institutional investors and through ordinary retail channels on exchanges constituted different categories of conduct under securities law. The ruling allowed XRP to continue trading on exchanges while constraining how Ripple itself could distribute the token going forward. That decision effectively bifurcated the regulatory treatment of XRP the asset from XRP sales by Ripple the company.

Ongoing Debate Over Consistency

Schwartz's comments fuel an existing tension between the SEC's enforcement approach and its public guidance on crypto assets. The agency has maintained it does not regulate XRP as a security in its current form, yet its earlier filings in the Ripple case referenced XRP's status in ways that suggested otherwise. The distinction between asset classification and company conduct remains contested in crypto policy circles.

Why It Matters

For Traders

XRP's regulatory status remains ambiguous pending SEC appeals; Schwartz's claim does not alter near-term market risk but underscores policy uncertainty.

For Investors

If Schwartz's claim is substantiated, it could weaken SEC credibility in future enforcement actions and support arguments that the agency acted inconsistently.

For Builders

Ripple's ambiguous regulatory footing continues to complicate token distribution and partnership structures for XRP-dependent platforms.