XRP Holders Get Investor Class Status, But Ripple Disagrees
• Ripple, the blockchain firm, recently faced a class action lawsuit due to XRP losses incurred by the plaintiffs.
• The investor class was granted certification in this case by Judge Phyllis J. Hamilton of US District Court for the Northern District of California.
• Ripple Labs contested the certification as “vast swathes” of XRP owners don’t believe that the asset is a security.
XRP Losses Incurred by Plaintiffs Lead to Lawsuit
Ripple, a San Francisco-based blockchain firm, recently faced a class action lawsuit due to XRP losses incurred by the plaintiffs. The lead plaintiff reported purchasing and selling XRP only during a two-week window in 2018 with an expectation that the token’s price would increase based on Ripple’s efforts. This prompted them to file a lawsuit against Ripple Labs claiming that they had engaged in an illegal scheme to raise hundreds of millions of dollars through selling unregistered securities in XRP tokens without registering with regulatory authorities like SEC.
Class Status Granted To Investors By Judge Phyllis J. Hamilton
Judge Phyllis J. Hamilton of US District Court for the Northern District of California granted certification to the investor class after assessing that it met four requirements for certification, allowing the lawsuit to proceed against Ripple Labs and its subsidiary ‘XRP II’ as well.
Vast Swathes Of XRP Owners Don’t Believe Asset Is A Security
However, Ripple CEO Bradley Garlinghouse and its subsidiary contested this certification as “vast swathes” of XRP owners don’t believe that their asset is a security according to The Howey Test used for determining securities status which relies on buyers‘ expectations at least partially.
Buyer’s Expectations Are Major Bone Of Contention In Lawsuit
This proves challenging when it comes to such cases as buyer’s expectations are major bone of contention in this case too despite granting certifications to investors involved in this crypto securities lawsuit against Ripple Labs over their losses incurred due to investing in XRP tokens.
SEC Also Filed Case Against Ripple Over Unregistered Securities
The Securities and Exchange Commission (SEC) has also filed a separate case against Ripple alleging it sold billions of dollars worth unregistered securities via cryptocurrency exchange Coinbase since 2013 without registering with them first or providing details about their business operations or finances while doing so