How Did the SEC V. Ripple Labs Case Influence the Application of the Howey Test to Different Types of Crypto Sales?

The SEC v. Ripple Labs case introduced a distinction in the application of the Howey Test based on the type of sale.

The court ruled that Ripple's direct "Institutional Sales" of XRP were investment contracts (securities) because buyers had a reasonable expectation of profit based on Ripple's efforts. However, the court found that "Programmatic Sales" (open market sales to the public) were not securities because the buyers were often anonymous and could not have reasonably relied on Ripple's efforts, thus breaking the final Howey prong.

This created a legal precedent differentiating between direct sales to sophisticated parties and blind secondary market sales.