According to Bloomberg, U.S. District Judge Jed Rakoff allowed the U.S. Securities and Exchange Commission (SEC) to continue hearing the case against Terraform Labs and its founder Do Kwon, and said he refused to distinguish between public sales and institutional sales in the Ripple case, saying that "the court refused to distinguish between these tokens based on how they were sold, that is, tokens sold directly to institutional investors are considered securities, while tokens sold to retail investors through secondary market transactions are not." This is a break with the ruling of another judge in July, who ruled that XRP tokens were not securities when sold to the public on the secondary market.

Foresight News previously reported that in mid-July, the U.S. District Court for the Southern District of New York ruled on the U.S. SEC's allegations against Ripple, holding that XRP itself was not a "contract, transaction, or plan" that embodied the Howey requirements of an investment contract, and that Ripple's sale of XRP through institutions constituted an unregistered offer and sale of investment contracts.