- A class of investors has been certified in the class-action lawsuit against Ripple Labs, allowing thousands of US XRP investors to assert their securities claims.
- Despite Ripple’s global reach, the case is limited to US investors, marking a notable development in the evolving legal landscape surrounding cryptocurrencies.
In a crucial juncture for XRP investors, Judge Phyllis J. Hamilton from the US District Court for the Northern District of California has given a nod to a class of investors in the class-action lawsuit Zakinov vs. Ripple Labs Inc. The key allegation centers around Ripple’s non-compliance with federal and state laws by not registering its digital asset, XRP, as a security.
The Ripple Lawsuit: A Turning Point for Investors
This ruling enables an enormous number of XRP buyers to assert their securities claims against Ripple, its subsidiary XRP II, and CEO Bradley Garlinghouse. The last courtroom proceedings in the XRP investor class-action lawsuit against Ripple took place two months ago.
The lead plaintiff, Bradley Sostack, initiated a motion to assemble a class composed of global XRP owners who bought, still hold, or have sold XRP at a loss. This order affirms the right of US investors to seek legal recourse, though defense attorneys successfully argued for the case to be confined to US investors, in spite of Ripple’s international presence.
In this complex legal sphere, Judge Hamilton acknowledged the fluctuating legal landscape surrounding cryptocurrencies. She underscored the struggles different countries face when classifying digital assets, emphasizing the necessity to allow individual jurisdictions to enforce their cryptocurrency regulations, adding,
“Given the evolving legal landscape in this area, the court is unwilling to apply California law to a worldwide class of XRP purchasers.”
This ruling marks a significant stride for the lead plaintiff and his legal team, who allege a loss of $118,100 after selling XRP in 2018 due to Ripple’s misleading claims regarding the token’s security status. This opens doors for other XRP investors to join the class action, seeking recompense for their supposed losses.
Ripple and Garlinghouse’s defense attorneys argued that class members held conflicting views on XRP’s security status, which they believed would instigate conflict within the class. However, Judge Hamilton dismissed this argument, stating that any disagreements could be handled through the standard opt-out procedure.
In anticipation of the lawsuit’s next phase, Nick Spear of Susman Godfrey expressed satisfaction with the court’s decision. A Ripple spokesperson highlighted the court’s rejection of a “worldwide class” and underscored the importance of allowing other countries to regulate cryptocurrencies independently. The court’s readiness to await the SEC v. Ripple case’s outcome before progressing further was also acknowledged by the spokesperson.