California Judge Dismisses Class-Action Claims Against Ripple, Sends Individual Case to Trial
In a recent development, a California judge has dismissed a set of class-action claims against Ripple related to the sale of XRP, but has allowed an individual case to proceed to trial. The lawsuit was brought forward by Bradley Sostack, a former XRP investor, who alleged that Ripple illegally sold XRP as an unregistered security and violated advertising laws in California.
District Judge Phyllis J. Hamilton ruled that Ripple did not violate securities laws in both federal and state class-action claims. However, she did allow Sostack’s individual case to move forward. The case revolves around allegations that Ripple CEO Brad Garlinghouse made misleading statements regarding XRP in a 2017 interview.
In her ruling, Judge Hamilton referenced the Howey test, a legal criteria used to determine whether a transaction constitutes an investment contract. She stated that the court cannot find as a matter of law that a reasonable investor would have expected profit solely from Ripple’s efforts, rather than general cryptocurrency market trends.
The classification of XRP as a security has been a subject of public debate, especially after the U.S. Securities and Exchange Commission (SEC) sued Ripple in late 2020 for selling XRP as an unregistered security. While a previous ruling by US District Judge Analisa Torres found that Ripple’s open-market sales of XRP did not constitute security offerings, the SEC’s claim regarding sales to institutional buyers was upheld.
Ripple CEO Brad Garlinghouse hailed the California judge’s ruling as a “big win” for the company, emphasizing that it does not change the outcome of the SEC case. He dismissed the individual case as an attempt by “trolls” to distort statements and seek large settlements.
Overall, the ruling marks a significant development in the legal battle surrounding Ripple and XRP, shedding light on the complexities of cryptocurrency regulation and investor expectations. Stay tuned for further updates as the individual case moves to trial.
