The XRP Lawsuit Is Over—But What the F*ck Was It Even About?"

Well, well, well, look who finally threw in the towel. After four years of legal foreplay, the SEC just dropped its case against Ripple, making this one of the biggest L’s in crypto regulatory history. If you’ve been following this circus of a lawsuit, congrats, you survived what felt like a financial soap opera. If you have no clue what this is about, don’t worry, I’ll break it down like you’re five and explain why this was one of the dumbest cases ever.

Also, for all you XRP moonboys out there celebrating, This is kind the second coming of Christ. But if you are not an XRP holder you should also pay attention to this case because it is a big deal for crypto, it could change how regulators go after digital assets.

So, let’s get into the sh*tshow that was the Ripple lawsuit.

XRP lawsuit explained - WTF happened?

Back in December 2020, the SEC (Securities and Exchange Commission, aka Fun Police of Finance) sued Ripple Labs, claiming that XRP is an unregistered security and that Ripple illegally sold $1.3 billion worth of it. Translation: The SEC basically said, "Ripple, you guys are selling XRP like it’s a crypto, but actually, it’s a stock, so you need to register it with us." Ripple’s response was: "Go f*ck yourselves."* (paraphrasing, but you get the point).

For four years, this lawsuit dragged on, and Ripple actually won some major victories along the way. The biggest one came in July 2023, when a judge ruled that XRP is NOT a security when traded on exchanges (where retail investors buy it) but COULD be a security when sold to institutions (big banks, hedge funds, etc.). This was like telling someone, "Your weed dealer is a criminal, but if you buy the same s*ht at a dispensary, you’re fine."* Make it make sense.

And now? The XRP lawsuit is finally over, the SEC has completely dropped the case. No appeal, no fines, no jail time for Ripple’s CEO. Just a big ol’ ‘we f*cked up’ from the government. XRP shot up 13% on the news, and now everyone’s acting like they knew this would happen all along.

Are you bullish on XRP?

• HELL YEAH BROTHER
• No it's chop

What the hell was the SEC thinking?

The SEC’s whole argument was based on something called The Howey Test—a legal test from 1946 that determines if something is a security (aka a regulated financial asset).

🧪 But what is the Howey Test exactly 🧪

To be classified as a security under the Howey Test, something has to meet all four of these conditions:

1. There’s an investment of money.

You’re putting money (or anything valuable) into something. Could be cash, crypto, your grandma’s ring—whatever. If you're handing over value, check this box.

2. It’s a common enterprise.

Your money is being pooled with other investors’. Everyone’s in the same boat, hoping the thing you bought into takes off.

3. You expect to make a profit.

Let’s be real—you're not buying random tokens or startup shares for fun. If you're hoping for gains, that’s another box checked.

4. Profits depend on someone else’s work.

If the value of your investment is riding on someone else doing all the heavy lifting—like devs building the tech, or a company hyping the project—then it's game over. That's the final piece, all the boxes ticked.

So why does this matter?

If something meets all four points, it’s a security. That means it has to follow SEC rules, be registered, and come with a fat pile of disclosures. Stocks follow these rules. So do some crypto projects… if the SEC can prove they pass this test. That’s what the whole Ripple case was about—whether XRP fit the Howey Test. And the court ended up saying “sometimes yes, sometimes no”, depending on how XRP was sold (to institutions vs. regular traders).

The SEC argued that XRP met all these criteria because Ripple was selling it, people were buying it with expectations of profit, and Ripple was doing things to make XRP more valuable. The problem was Bitcoin and Ethereum don’t pass the Howey Test either, but the SEC left them alone. The crypto world saw this lawsuit as selective enforcement, like the SEC was just making up rules as they went. The court agreed, at least partially, which is why the SEC got clapped in court and ultimately decided to drop the case.

What this means for crypto

This is a huge f*cking win for the industry. If the SEC had won, they could have gone after every major crypto projectthe same way, labeling ETH, SOL, ADA, and everything else as securities. But now? There’s a legal precedent saying that most crypto tokens aren’t securities when traded on exchanges.

Of course, the SEC isn’t done ruining crypto. They’re still going after Coinbase, Binance, Uniswap, and probably your nephew's Metamask wallet next. But this case showed that crypto can fight back and win. So, if you’re in the XRP army, go ahead and gloat a little. If you’re not, just know this case saved a lot of other cryptos from the SEC’s dumbass lawsuits. Either way, the war isn’t over, but this battle? A clear W for crypto.