A California judge delivered a mixed verdict in the ongoing legal battle between Ripple(XRP) Labs and the SEC. While most class action claims against Ripple were dismissed, a key question regarding XRP’s classification as a security remains unanswered.
Court Dismisses Most Class Action Claims
Judge Phyllis Hamilton granted Ripple’s motion for summary judgment on federal and state law securities claims brought by a class of investors. This dismissal marks a significant victory for Ripple, eliminating the threat of widespread financial penalties.
However, the core issue of XRP’s status as a security wasn’t addressed in this dismissal. The court determined that a jury will decide this based on the Howey Test, a legal framework used to define investment contracts (securities).
XRP Sales to Programmatic Traders Deemed Securities
In a separate but crucial development, Judge Hamilton ruled that XRP sold to “programmatic” traders constituted securities. This finding hinges on the expectation of profits derived from the efforts of others, a key prong of the Howey Test. This ruling could have broader implications for the classification of similar digital assets.
Ripple CEO Faces Trial Over XRP Sales
Adding another layer of complexity, a separate lawsuit against Ripple CEO Brad Garlinghouse will proceed to trial. He is accused of misleading investors regarding his XRP holdings while allegedly selling large quantities. This case centers on potential violations of California securities laws.
Also Read: XRP Price: Will Ripple’s Sales Clip Its Wings? Community Divided As Token Eyes 3.84$ Hurdle
Uncertain Future for XRP
The legal landscape surrounding XRP remains murky. While the dismissal of class action claims and the lack of a definitive ruling on XRP’s status are positive developments for Ripple, the upcoming trial against Garlinghouse poses a significant risk.
Settlement or Regulatory Clarity Needed
Legal experts predict a potential settlement due to the limited damages at stake and the unpredictability of a jury trial. However, a definitive resolution hinges on federal legislation that clarifies the classification of digital assets like XRP. This ongoing saga highlights the need for clear regulatory frameworks within the cryptocurrency industry.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
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