The US District Court for the Northern District of California granted Ripple’s critical motion for summary judgment. Ripple thus secured a procedural victory in the class action in Oakland, with a judge dismissing several claims. Meanwhile, pro-Ripple attorney Jeremy Hogan expresses skepticism that the SEC will achieve a clear win in its appeal against Ripple. The complexity of the case could lead to protracted legal proceedings even if the SEC initially wins.
Ripple scores a win against the SEC with the acceptance of its request!
Judge Phyllis Hamilton dismissed most of the class action claims against Ripple. Both federal class claims for unregistered securities and state law securities claims were dismissed. This is a procedural victory for Ripple. However, the dismissal did not address the fundamental question of whether XRP is a security.
Ripple’s Chief Legal Officer Stu Alderoty expressed his satisfaction with the court’s decision. In this context, Alderoty said, “We are pleased that the California court dismissed all class action claims. The only remaining individual state law claim will be addressed at trial.”
The jury will decide whether XRP is a ‘security’!
However, the court noted that XRP’s status as a security is still unclear, even with procedural victories. The court noted that it is up to the jury to decide whether all three prongs of the Howey test are satisfied. In addition to the class action, another civil securities lawsuit against Ripple CEO Brad Garlinghouse will also go to trial. In that case, the court denied part of Ripple’s motion for summary judgment regarding Garlinghouse’s alleged sale of unregistered securities in 2017. The plaintiff alleges that Garlinghouse lied about having “very, very long XRP” while dumping millions of XRP on various exchanges.
However, legal expert Fred Rispoli said that low damages are at stake for Ripple if the plaintiff wins. He also noted that given the potential unfavorable jury verdict, a settlement is highly likely. Rispoli also emphasized that the question of whether XRP is a security remains unanswered. He stated that federal legislation is needed to address this issue.
Ripple’s lawyers argue that XRP does not meet the Howey Test’s definition of a security. Therefore, they argue that the case should be dismissed. However, Judge Hamilton ruled that the case should proceed to trial. He also ruled that it could not be determined as a matter of law that Ripple’s conduct would lead a reasonable investor to expect profits due to the company’s efforts.
SEC faces a tough road in Ripple appeal
Jeremy Hogan, a pro-XRP lawyer, has expressed skepticism about the SEC achieving a decisive victory in its ongoing legal battle with Ripple. The case, which is currently pending before the US Court of Appeals for the Second Circuit, may not end favorably for the SEC even if it wins the appeal. Hogan believes that the complexity of the case means that the SEC could face an uphill battle on appeal. Even with a possible win, the case will likely return to the trial court for further factual assessments. This reflects a scenario in which the SEC’s initial victory could lead to more protracted legal proceedings.
As you have been following on Kriptokoin.com, a district court ruled that XRP is not a security. This ruling brought various interpretations. The decision ruled that XRP tokens are not securities when sold to individual investors on exchanges. However, the same ruling concluded that Ripple’s sales to institutional investors violated federal securities laws. Kristina Littman, former Division Chief of the SEC, hinted that there is a possibility that the SEC will not appeal the Ripple decision to a higher court and that the decision may remain the opinion of an independent district court. This decision is in contrast to the previous case, the SEC’s decision in the Terraform Labs case. That case argued that the legal status of a token should not vary based on the type of investor. This different perspective was influential in the Coinbase decision and is considered a victory for the SEC.
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