The ruling dismissed four of the five claims in the class action lawsuit against Ripple which were termed as “failure to register claims”.
A California judge has ruled that the civil securities litigation against American fintech firm Ripple Labs Inc. will proceed to trial, which has shocked the crypto sector. Judge Phyllis Hamilton of the US District Court for the Northern District of California partially denied Ripple’s motion for summary judgment in a case that alleged that Ripple’s CEO, Brad Garlinghouse, violated state securities laws in 2017.
Meanwhile, the data from CoinMarketCap shows that the XRP price is down almost 9% in the past 30 days and decreased over 1% in value since June 2023. The price action of XRP showed a few signs of bullish movements but failed to generate an upward trajectory. The price of the altcoin is 87.26% lower from its all-time high of around $3.8 witnessed in January 2018.
The lawsuit centers on claims that Garlinghouse made misleading statements during a 2017 televised interview, in relation to the sale of Ripple’s XRP. The plaintiff claims that Garlinghouse professed to be “very, very long XRP” while also selling millions of XRP on various cryptocurrency exchanges. This, according to the plaintiff, constitutes a violation of California’s securities laws.
Judge Hamilton’s ruling dismissed four of the five claims in the class action lawsuit which were termed as “failure to register claims.” However, the claim regarding Garlinghouse’s alleged misleading statements will proceed to trial.
In her ruling, Judge Hamilton stated that the court could not determine “that a reasonable investor would have derived any expectation of profit from general cryptocurrency market trends, as opposed to Ripple’s efforts to facilitate XRP’s use in cross-border payments, among other things.”
Ripple Continues to Battle Legal Issues
Ripple’s legal team had argued for the dismissal of the claims on the grounds that XRP does not satisfy the definition of a security under the Howey Test. The attorneys urged Judge Hamilton to take into account the reasoning of US District Court Judge Analisa Torres, who had previously determined that XRP did not satisfy all of the elements of the Howey Test when sold directly to retail participants on cryptocurrency exchanges.
The ruling of Judge Torres in the Southern District of New York (SDNY) was perceived as a partial victory for Ripple and a potential precedent for other crypto cases. The crypto industry hailed it as a significant stride toward regulatory clarity.
The market seems to have remained sluggish for XRP despite the ruling from Torres. However, there are talks of an XRP exchange-traded fund (ETF) as well which might boost the prices of the altcoin. However, the SEC might be hesitant in the approval of such a product.
On the other hand, Ripple’s Chief Legal Officer, Stu Alderoty, expressed satisfaction with the dismissal of the class action claims but acknowledged the need to address the remaining state law claim at trial. “We are pleased that the California court dismissed all class action claims. The one individual state law claim that survived will be dealt with at trial,” Alderoty stated.
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