Judge Allows US XRP Investors to File Securities Claims

Author: Jake Simmons, BITCOINIST; Compiler: Songxue, Jinse Finance

In a major development for Ripple investors, federal Judge Phyllis J. Hamilton from the U.S. District Court for the Northern District of California ruled against Zakinov in a class-action lawsuit against Ripple Labs Inc. Class investors are certified. The lead plaintiff alleges that Ripple violated federal and state laws by failing to register its digital asset, XRP, as a security.

The judge's order enables thousands of XRP buyers to file securities claims against Ripple, its subsidiary XRP II, and CEO Bradley Garlinghouse. According to Bitcoinist, the last hearing of XRP investors’ class action lawsuit against Ripple took place two months ago.

Lead plaintiff Bradley Sostack filed a motion to create a group of all XRP owners worldwide who bought and now hold XRP or sell it at a loss.

What this ruling means for Ripple and Ripple investors

Senior U.S. District Judge Phyllis Hamilton, who is in charge of the case, issued a class certification order on June 30 affirming the right of U.S. investors to seek legal recourse. Notably, however, defense attorneys managed to limit the case to U.S. investors, despite Ripple’s global reach.

Judge Hamilton acknowledged the changing legal environment surrounding cryptocurrencies and highlighted that different countries are grappling with the classification of digital assets. She expressed the need to allow other jurisdictions to enforce their own cryptocurrency regulations, noting: “Given the evolving legal landscape in this space, courts are reluctant to apply California law to global XRP buyers.”

The ruling is a major victory for the lead plaintiffs and their legal representatives, Susman Godfrey and Taylor-Copeland Law. Sostack claims he suffered a $118,100 loss after selling XRP in 2018 due to Ripple’s misleading claims about the token’s security status. The decision paves the way for other XRP investors to join the class action and seek compensation for their alleged losses.

Unsurprisingly, defense attorneys for Ripple and Garlinghouse argued that team members had differing views on whether Ripple should be considered a security. They believed that this division would create conflict internally.

However, Judge Hamilton rejected that argument, stating that any differences could be resolved through the standard opt-out process, allowing dissenting class members to opt out of the proceeding.

Looking ahead, Nick Spear of law firm Susman Godfrey expressed satisfaction with the court's decision and looked forward to the next stage of litigation. A spokesperson for Ripple, on the other hand, emphasized the rejection of the plaintiffs’ request for a “global classification,” emphasizing the importance of allowing other countries to regulate cryptocurrencies as they see fit.

With this ruling, the court also expressed its willingness to wait for the outcome of the SEC vs. Ripple lawsuit before proceeding with the lawsuit, which was brought by expert plaintiffs’ attorneys to profit from the failure of the US to provide regulatory clarity.