After being sued by multiple investors in the past who claim XRP tokens to be securities, San Francisco-based blockchain startup Ripple finally gets hope and relief. Ripple Labs has been working on addressing several class action lawsuits filed against it. The company is also trying to coordinate for a single response to lawsuits of the similar nature.
On Wednesday, August 29, a lawsuit filed by an investor David Oconer at California Superior Court was regarded as a “complex litigation” which means that it shall now be coordinated with other similar lawsuits. Hence David’s lawsuit against Ripple will be considered similar to another California case, filed by investor Vladi Zakino.
The California Court rules have a prerequisite that the case involves “securities claims or investment losses involving many parties,” for it to be deemed as a “complex litigation”. Under this new status, the court asks judges to oversee actions in order to prevent the duplication of efforts as well eliminating the possibility of different results in different cases, but of similar nature.
Earlier this month, Ripple Labs had filed to coordinate that the lawsuits filed by Zakinov and Oconer concern “‘all are a material part of the same subject matter’ and involve “all or substantially all of the same parties”. However, one bad news for Ripple Labs is that the Oconer lawsuit has been assigned to Judge Marie Weiner whom the startup company had earlier disqualified from presiding over the Zakinov case. Not sure whether will Ripple will take a similar stand this time as well.
Ripple Has Issued Clarification on XRP
After several lawsuits filed against the company claiming XRP to be a security, the blockchain startup issued a clarification on how its brand differs from its XRP digital tokens. The U.S. Securities and Exchange Commission has been reviewing all the claims from the investors. and still remains uncertain over the status of XRP.
Ripple Labs currently owns 60 billion XRP tokens with nearly 55 billion kept in the escrow. Investors have also accused the company of a having a high level of centralization while several experts have claimed that the company tries to artificially inflate the price of these tokens to fund its business. However, CEO Brad Garlinghouse insists that the digital coin is not a security. Garlinghouse sites a few reasons showing how XRP and Ripple are different:
- “If Ripple as a company shut down tomorrow, the XRP ledger would continue to operate.”
- “If you buy XRP, you’re not buying shares of Ripple.” Similarly, “Saudi Arabia owns a lot of oil, but they do not have control of oil.”
- “XRP is solving a problem. There’s no security in a utility.”
This year, Ripple Labs has brought several giant banking partners onboard to its Ripple ecosystem from UAE, Asia and certain parts of Europe. However, it has to be noted that even though they use the Ripple’s blockchain technology for instant and low-cost cross-border settlements, not all are part of its xRapid ecosystem which uses the XRP tokens.