Ripple Secures Procedural Victory in Legal Battle
The recent court ruling in the class action claims against Ripple yielded a significant procedural win for the company, with Judge Phyllis Hamilton dismissing most of the claims. However, the core issue of whether XRP is a security remains unresolved and is set to be determined by a jury. Ripple’s Chief Legal Officer, Stuart Alderoty, expressed satisfaction with the court’s decision, highlighting the dismissal of all class action claims and the remaining individual state law claim to be addressed at trial.
The Likely Outcomes and Legal Expert Reaction
The unresolved status of XRP as a security continues to be a focal point, as the court emphasized that this matter will be decided by a jury. Additionally, a separate civil securities lawsuit against Ripple CEO Brad Garlinghouse regarding the sale of unregistered securities will be evaluated.
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Legal expert Fred Rispoli explained that if the plaintiffs win, Ripple’s damages are expected to be minimal, and there is a high likelihood of settlement due to the potential for an unfavourable jury decision. The issue of XRP’s status as a security necessitates federal legislation for a conclusive resolution, according to Rispoli post on X.
“The class action is now over at the district court level. As to whether XRP is a security, however, the Court held it is for a jury to decide whether all three prongs of the Howey test are met. That claim, a individual claim by one plaintiff, will go to trial”
Ripple’s attorneys argue that XRP does not meet the definition of a security under the Howey Test and have sought the case’s dismissal on these grounds. However, Judge Hamilton ruled that the proceedings must proceed, acknowledging the inability to definitively determine whether a reasonable investor would expect profit based on Ripple’s efforts.
SEC Encountering Challenges in Appeal
In the appeal against Ripple, Attorney Jeremy Hogan expressed doubts about the SEC’s chances of securing a conclusive victory. The case faces significant challenges for the SEC in the US Court of Appeals for the Second Circuit, and even if the SEC emerges victorious, the case would likely return to the trial court for further evaluations, leading to protracted legal proceedings.
A recent district court ruling found that XRP is not a security when sold to individual investors on exchanges but constituted violations of federal securities laws in sales to institutional investors. Former SEC Division Chief Kristina Littman suggested that the SEC might not pursue the decision further, potentially leaving it as an isolated district court opinion. However, this perspective differs from a previous ruling in the SEC’s case against Terraform Labs, which argued against varying a token’s legal status based on the type of investor involved.
Conclusion
Ultimately, despite Ripple’s recent procedural victories, the unresolved issue surrounding XRP’s classification as a security continues to be the focus. Future developments, including jury decisions and potential legislative changes, will be crucial in determining XRP’s legal status and the outcome of this high-profile case.
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Tosin Matthew is a dynamic figure in the crypto sphere, blending content creation with astute analysis. With a sharp eye for market trends and a passion for blockchain technology, Tosin delivers insightful content that educates and empowers. Trusted by audiences for expert guidance in navigating the complexities of cryptocurrency.
