Judge Rejects Most ripple Claims, One Appears in Court
Ripple scored a procedural victory when a judge dismissed many claims in the Oakland class-action lawsuit.
The U.S. District Court for the Northern District of California granted Ripple’s motion for summary judgment on federal class claims for unregistered securities and state law securities claims.
Disclaimer of Ripple Federal and State Law Claims
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.
But 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 and said:
XRP Security Status Will Be Determined by the Jury
However, the court noted that despite the procedural gains, XRP’s status as a security is still unclear. The court stated that it was up to the jury to decide whether all three elements of the Howey test were met.
Along with the class-action lawsuit, another civil securities lawsuit against Ripple CEO Brad Garlinghouse is also set to go to trial. In that case, the court denied a portion of Ripple’s motion for summary judgment alleging that Garlinghouse sold unregistered securities in 2017. The plaintiff alleges that Garlinghouse lied about being “very, very long XRP” when pouring millions of XRP into various exchanges.
But legal expert Fred Rispoli noted in X that a settlement is likely, given the low damages for Ripple and the potential adverse jury verdict if the plaintiff wins. Rispoli also emphasized that the question of whether XRP is a security remains unanswered and noted that federal legislation is needed to address this issue.
Ripple’s lawyers stated that XRP does not meet the Howey Test’s definition of a security and therefore the case should be dismissed. However, Judge Hamilton ruled that the case should proceed to trial and ruled that Ripple’s conduct could not be determined as a matter of law to cause a reasonable investor to expect a profit from the company’s efforts.
Sealing Recommendations and Upcoming Deadlines
At the hearing, the court ordered both parties to reconsider their requests to have any portion of the transcripts sealed based on the court’s decision to deny their requests. Both parties filed unredacted briefs and also asked to give the court another three weeks to file a motion to seal some of the exhibits they used.
The court allowed this and set the new deadline for the submission of the sealing motion on narrowed grounds as July 8, 2024. As for the sealed motion, a separate decision will be made regarding the narrowed motion.
However, Judge Hamilton’s decision differs from that of U.S. District Court Judge Analisa Torres in the Southern District of New York, who held that XRP is not a security when sold to retail investors because it does not meet all the elements of the Howey Test.
Also read: Jeremy Hogan Predicts SEC Won’t Net Win in Ripple Case Appeal
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Kelvin is a distinguished author specializing in crypto and finance, with a bachelor’s degree in Actuarial Science. Known for his sharp analysis and insightful content, he is fluent in English and specializes in comprehensive research and on-time delivery.
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