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- Ripple Labs has tapped a procedure win regarding a Class Action lawsuit it is facing in California.
- The case centers around the classification of XRP as a security, a suit that may form a crucial precedence.
American technology company, Ripple Labs Inc. has been granted procedural victory in its ongoing case with the US Securities and Exchange Commission (SEC). The next phase of the case will be sorted at a jury trial, where clarity on XRP’s security status will be determined.
Ripple Labs’ Class Action Lawsuit Over at District Court
Crypto attorney Fred Rispoli highlighted in an X post that Ripple’s Oakland class action lawsuit has been dismissed at the US District Court for the Northern District of California. Judge Phyllis Hamilton granted Ripple’s motion for summary judgment on all federal class action claims alleging unregistered securities. This judgment also extends to state law claims, effectively dismissing them from the case.
Win for @Ripple in the Oakland class action. Judge grants Ripple’s summary judgment motion on federal class claims for unregistered securities as well as the state law securities claims. But these were procedural wins. 1/4 #xrpholders #xrp
— Fred Rispoli (@freddyriz) June 20, 2024
While this appears to be a major win for Ripple, it is important to understand the distinction between a procedural and substantive victory. The judge essentially ruled that the way the class action lawsuit was structured was not suitable for these specific claims. This does not necessarily mean Ripple is off the hook entirely. The core question of XRP’s classification as a security remains unanswered.
However, the judge did allow one individual claim to proceed to trial. This claim, brought by a single plaintiff, hinges on whether XRP qualifies as a security under the Howey Test. This three-pronged test determines if an investment contract exists. Here, a jury will decide if XRP meets all three prongs, a decision with immense implications for the future of XRP.
Ripple’s Chief Legal Officer, Stuart Alderoty, expressed satisfaction with the court’s decision on the Ripple lawsuit, stating:
We are glad that the California court has dismissed all the class action claims. The only individual state law claim that has been left will be addressed in the trial.
Despite the procedural win, Ripple faces a potentially risky trial. A jury verdict finding XRP to be a security could have severe consequences, including hefty fines and regulatory hurdles. Rispoli believes a settlement seems more likely given the low damages and potential negative jury verdict for Ripple if the plaintiff wins.
More Legal Battle for Ripple
In addition to the class action, Ripple CEO Brad Garlinghouse is the target of a second civil securities complaint. This complaint is slated to go to trial soon.
This case centers around claims that Garlinghouse sold unregistered securities in 2017. The court, however, denied part of Ripple’s motion for summary judgment. The plaintiff accused Garlinghouse of lying about being long XRP while dumping millions of the token on other exchanges.
The upcoming trial will serve as a crucial test case, potentially setting a precedent for XRP in California. As of this writing, XRP is trading at $0.4887, demonstrating a decline of 1.85% in 24 hours. However, the trading volume declined by 7.5% to $1 billion, while the market cap is $27 billion.
