Ripple faces New Lawsuit in California Over the Sale of XRP


  • Ripple’s legal battles, including the ongoing dispute with the SEC and the new lawsuit in California, have significant implications for both the company and stakeholders.
  • These legal proceedings highlight the regulatory uncertainties facing the cryptocurrency industry, underscoring the importance of clear policies governing digital assets.

Ripple Labs Inc., along with CEO Brad Garlinghouse and its subsidiary XRP II, LLC, are embroiled in a new legal dispute in California. They once again face charges of selling XRP without the necessary registration and violating securities laws, although Ripple has refuted these allegations.

The lawsuit, filed in the Northern District of California, alleges that Ripple violated federal and state securities laws by selling XRP without proper registration. The plaintiffs aim to represent two groups: the Federal Securities Claims Class and the California State Securities Claims Class, encompassing individuals and entities who purchased XRP between July 3, 2017, and June 30, 2023.

Ripple and its co-defendants have responded to these accusations by asserting that XRP does not meet the criteria of a security and, as a result, does not necessitate registration.

Regrettably, this regulatory legal battle places Ripple in a precarious position. While Ripple has garnered support from numerous senators and legislative allies, the California lawsuit poses a potential obstacle in its ongoing dispute with the SEC.

Ripple contends that XRP should be classified as a digital currency facilitating global transactions, not as a security. The resolution of this case may significantly influence how digital assets are regulated by U.S. authorities, thereby impacting the broader cryptocurrency market.

Consequences of Lawsuit for Ripple and Stakeholders

Under the new class action, affected parties must decide by April 5 whether to opt out and pursue separate legal actions against Ripple. This decision underscores the lawsuit’s significant ramifications for both Ripple and stakeholders in the digital currency market.

However, Ripple’s legal challenges extend beyond this class action lawsuit, as it also faces litigation from the U.S. Securities and Exchange Commission (SEC) filed in December 2020. The SEC alleges that Ripple conducted an unregistered securities offering of $1.3 billion through XRP sales.

Recent developments, such as the motion filed by digital asset exchange Kraken to dismiss the SEC lawsuit, add further complexity to the regulatory landscape. Kraken’s motion cites a ruling by Judge Torres regarding programmatic sales, illustrating the legal maneuvers employed by investors and traders to navigate regulatory scrutiny. Overall, Ripple’s ongoing legal battles highlight the regulatory uncertainties within the cryptocurrency industry and emphasize the need for clear policies governing digital assets.

Despite this, Ripple has continued to push boundaries in terms of expanding its platform and ecosystem. The XRP Ledger (XRPL) is nearing the release of a financial market protocol as part of its continued efforts to develop a native lending protocol for the blockchain.

As of press time, the XRP price is trading 5.43% up at $0.56 with a market cap of $30.5 billion.

 



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