SEC v. Terraform Labs Pte. Ltd.
Summary
Decided two weeks after Ripple, Judge Rakoff expressly DECLINED to follow Ripple's distinction between institutional and programmatic (secondary-market) buyers, denying the motion to dismiss and creating an open split within the same district.
Holdings
Does Howey distinguish between buyers who purchase directly vs. on the secondary market?
No. Rakoff held Howey draws no such distinction: whether a purchaser bought directly from the defendants or in a secondary resale does not change whether a reasonable buyer would view the defendants' conduct as promising profits from their efforts. This rejects Ripple's programmatic-sales reasoning.
Quote as reported (operator-verify): “Howey makes no such distinction between purchasers. That a purchaser bought the coins directly from the defendants or, instead, in a secondary re-sale transaction has no impact on whether a reasonable individual would objectively view the defendants' actions and statements as evincing a promise of profits based on their efforts.”
Source: Morrison Foerster (quoting the opinion) · fetched 2026-06-04
Why it matters
Terraform is the express counter to Ripple and the reason the secondary-sale question is genuinely unsettled at the district level. The conflict drove the push for a statutory fix (CLARITY Act) and the 2026 SEC-CFTC joint interpretation.
Mortgage relevance
Minimal: securities-classification precedent (UST was an algorithmic stablecoin).