The Howie Test and the SEC's Judgment in Ripple

The howie test is of course the legal theory set out in a 1946 Supreme Court decision, which determines under what circumstances an agreement should be considered a sale of securities. Ripple sold tokens directly to institutional investors on fixed terms with surrounding marketing materials promoting XRP tokens as a sound investment. A second set of sales occurred when Ripple sold tokens into the open market, where retail investors were able to purchase those tokens at the prevailing market rate. During this period, there was an active market for XRP tokens, with sales from Ripple representing less than 1% of overall market volume. The judge found that these circumstances meant that Sales of XRP tokens were not a sale of Securities.