- The US Northern District Court of California has accepted Ripple’s critical summary judgment request.
- This ruling represents a procedural victory for Ripple in its class action lawsuit held in Oakland.
- Pro-Ripple attorney Jeremy Hogan expresses doubts about SEC’s chances of gaining a definitive win in their appeal against Ripple.
Discover the latest developments in Ripple’s legal battle against the SEC, showcasing recent procedural victories and ongoing complexities.
Ripple Achieves Procedural Victory Against the SEC
The court has dismissed most of the class action claims against Ripple, including federal class claims for unregistered securities and state securities claims. This marks a significant procedural win for the company. However, this dismissal does not address the core issue of whether XRP is a security.
Judge Hamilton’s Decision and Ripple’s Response
Judge Phyllis Hamilton’s decision to dismiss the majority of the class action claims against Ripple has been well-received. Ripple’s Chief Legal Officer, Stu Alderoty, expressed satisfaction with the court’s ruling. He stated, “We are pleased that the California court has dismissed all class action claims. Only one individual state law claim remains to be addressed at trial.”
The Unresolved Status of XRP as a Security
The court underscored that despite the procedural wins, the status of XRP as a security remains to be decided by a jury. The jury will determine whether XRP meets the three prongs of the Howey test. Additionally, a separate civil securities lawsuit against Ripple CEO Brad Garlinghouse will be evaluated. The allegations involve claims that Garlinghouse sold unregistered securities in 2017, misleading investors about his positions on XRP.
Potential Outcomes and Legal Expert Commentary
Legal expert Fred Rispoli indicated that if the plaintiffs succeed, the damages for Ripple are expected to be minimal. He also suggested a high likelihood of settlement due to the potential for a negative jury decision. Rispoli emphasized that the issue of XRP’s status as a security requires federal legislation for a definitive resolution.
The class action is now over at the district court level. However, the Court held that the decision on whether XRP is a security is up to a jury, which will determine whether all three prongs of the Howey test are met. That individual claim by one plaintiff will proceed to trial.
Ripple’s attorneys maintain that XRP does not fit the Howey Test’s definition of a security and argue that the case should therefore be dismissed. However, Judge Hamilton ruled that the proceedings must continue, acknowledging that it’s not legally determinable whether a reasonable investor would expect profit based on Ripple’s efforts.
SEC Faces Challenges in Appeal
Attorney Jeremy Hogan, a Ripple supporter, articulated doubts about the SEC securing a conclusive victory in their appeal against Ripple. The case, now poised for review in the US Court of Appeals for the Second Circuit, will pose significant challenges for the SEC. Even if the SEC wins the appeal, the case would likely return to the trial court for further factual evaluations, suggesting protracted legal proceedings.
Sound logic. Even if the SEC “wins” the appeal, the case will be remanded to the trial court for additional factual determinations, preventing a final decisive victory for the SEC at the appellate level.
A recent district court ruling found XRP not to be a security when sold to individual investors on exchanges. However, Ripple’s sales to institutional investors were considered violations of federal securities laws. Former SEC Division Chief Kristina Littman suggests that the SEC might not elevate the decision to a higher court, potentially leaving the ruling as an isolated district court opinion. This perspective contrasts with a previous ruling in the SEC’s case against Terraform Labs, which argued that a token’s legal status should not vary based on the type of investor involved.
Conclusion
Ripple’s recent procedural victories in its legal battle against the SEC have brought significant attention to the complexities surrounding XRP’s classification as a security. While the court’s decisions favor Ripple procedurally, the fundamental issue remains unresolved. 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.
