Judge Torres seems to have (implicitly) rejected that argument and found that when Ripple went around selling XRP to institutional investors, it was selling securities.

But then she went on to say that when Ripple went around selling XRP on crypto exchanges with no disclosure, it was not selling securities. The disclosure creates the liability: If you go to an investor and say “hi, we are the issuer of this token, we think it is a good token, would you like some,” then you are selling a security; if you just anonymously dump the token to retail investors on a crypto exchange, then you are not. Judge Torres writes (citations omitted):