By
Steve Muchoki
April 19th, 2024
It has become known that two securities lawsuits previously filed against Ripple Labs have been consolidated by the court in California.
XRP price has gone down by 1.63%. This slight drop in prices has occurred as sources say that the U.S. Federal Judge has decided to join two cases against Ripple Labs. The lawsuits have to do with XRP sales. The lawsuits allege that Ripple sold XRP as an unregistered security. Bradley Sostack’s 2018 lawsuit will be merged with that of the Bitcoin Manipulation Abatement (BMA).
Sostack’s 2018 lawsuit alleges that Ripple violated advertising laws in the U.S. state of California. The BMA lawsuit alleges that Ripple broke securities laws by selling its XRP token.
The Sostack lawsuit further alleges that Ripple Labs didn’t register with the U.S. SEC. It also alleges that Ripple has a continuously ongoing ICO.
Two Ripple Securities Lawsuits Are Joined
The Hon. Judge Phyllis Hamilton who is of the U.S. District Court for the Northern California District has said that merging the two cases will save resources.
She said:
“Relating the BMA action to this action would avoid the duplication of labor and conflicting results that might otherwise arise. Plainly, a core contention at issue in this litigation — whether XRP qualifies as a security under federal and California state law — is novel and nuanced. While the court is less concerned about potentially conflicting results, its determination of that core contention, in addition to that of the other questions presented in this action, will require significant labor.”
This presents a shift in the legal opinions of experts. They have been careful about the classification of cryptocurrency and other digital assets.
The determination of this single lawsuit will have many implications for the crypto space. Many of the cryptocurrency tokens that have been classified as commodities by the Commodities Futures Trading Commission (CFTC) could lose their status.
Cryptocurrency tokens will also face stricter scrutiny and regulation. This will be as a result of the final judgment. However, if the determination is in the reverse, cryptocurrency tokens will have easy conditions. Whatever happens, the lawsuit will be one of the landmark legal precedents for cryptocurrency tokens. Ripple Labs CEO Brad Garlinghouse has had to consistently deny such allegations.
Ripple and XRP have Many Issues
Ripple’s ability to issue fresh tokens has raised many eyebrows. The argument for those against such a move is that financial assets are meant to have a fixed supply. A case in point is Bitcoin (BTC). This excess supply has led to a great Depression in prices. This is what has angered many of the XRP investors. Another issue that Ripple has had to face is the utility use case scenario. XRP has been used primarily in one industry alone: remittances.
So much so that XRP has become the cryptocurrency token with the highest liquidity in the U.S.-Mexican remittance corridor. The XRP/MXN liquidity on Bitso has reached record levels. This comes as previous reports indicate that XRP accounted for about 10% of U.S.-Mexico remittances.
In the future, we are going to see the rise in the use of XRP in remittances. This is going to largely depend however on the outcome of the joined lawsuit.