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The class-action lawsuit against Ripple has received the greenlight from a federal judge.
The Court Moves Against Ripple
Ripple has long touted itself as a non-security, but several of the plaintiffs involved in the suit claim otherwise. One describes Ripple as an “ongoing ICO [initial coin offering],” while others scoff at the currency’s reportedly centralized nature. It is reported that more than 50 percent of XRP units are still held by Ripple executives including Brad Garlinghouse, the founder of the XRP feast so to speak.
This goes against everything that crypto stands for. Digital assets are built to be part of a decentralized system in which members of the public and those who utilize the currencies daily to obtain access to goods and services decide how and when they should be used. In addition, the currencies are not issued by specific institutions and grant privacy (at least somewhat) to traders engaged in transactions.
Many claim that Ripple doesn’t follow any of these rules, and U.S. District Judge Phyllis Hamilton of the Northern District of California seems to agree. In a heavy move against the third largest cryptocurrency by market cap, the overseeing court has decided that early XRP investors and buyers can file suit against the company to retake potential losses. While specific claims of the suit filed under California law were initially thrown out, plaintiffs have the option of refiling these claims granted they do so within a month.
The lawsuit is initially between Ripple and a “one-time XRP investor” named Bradley Sostack. While the judge overseeing the case says it’s possible the suit was filed too late, this doesn’t necessarily bar it from proceeding, and that more will be understood once the early phases of the suit are out of the way.
Based on plaintiff’s complaint and the judicially noticeable facts proffered, the court cannot conclude that defendants’ first bona fide public offer to sell XRP occurred before August 5, 2016… While defendants did acknowledge various 2013 offers and sales in their May 2015 settlement with the USAO [U.S. Attorney’s Office for the Northern District of California], the sales activity identified in that settlement does not show that defendants targeted the general public when offering to sell XRP.
This Whole Non-Security Thing Is a Bit Scary
Over the last two years, several cryptocurrency exchanges – including Coinbase, one of the largest and most popular crypto trading platforms in the U.S. – have expressed reluctance over offering Ripple’s XRP as a tradeable token given the controversial nature of its alleged “non-security status,” though the company does offer it through Coinbase Pro, a division of the exchange designed for experienced and more professional traders.
The same action has been taken by Gemini, a New York-based crypto exchange founded and governed by the Winklevoss Twins of “The Social Network” fame.